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UNITED STATES ARMY IN WORLD WAR II 

Special Studies 

BUYING AIRCRAFT: MATERIEL 
PROCUREMENT FOR THE 
ARMY AIR FORCES 



Irving Br in ton Holley, jr. 




CENTER OF MILITARY HISTORY 
UNITED STATES ARMY 



Library of Congress Catalog Card Number : 64-60000 



First Printed 1964 — CMH Pub 1 1-2 



For sale by the Superintendent of Documents, U.S. Government Printing Office 
Washington, D.C., 20402 



UNITED STATES ARMY IN WORLD WAR II 
Stetson Conn, General Editor 

Advisory Committee 

(As of 1 October 1962) 



Maj. Gen. George T. Duncan 
U.S. Continental Army Command 



William R. Emerson 
Yale University 

Earl Pomeroy 
University of Oregon 



Duke University 

Bell I. Wiley 
Emory University 




Brig. Gen. Ward S, Ryan 
U.S. Army War College 

Brig. Gen. Harry J. Lemley, Jr. 
U.S. Army Command and General Staff College 

Col. Vincent J. Esposito 

Uni 

C. Vann Woodward 



Office of the Chief of Military History 
Gen. Hal C. Pattison, Chief of Military History 



Chief Historian 
Chief, Histories Division 

Editor in Chief 



Kvision 



Stetson Conn 
Col. Louis G. Mendez, Jr. 
Lt. Col. James R. Hillard 
Joseph R. Friedman 



iii 



. to Those Who Served 



Foreword 



Buying Aircraft: Materiel Procurement for the Army Air Forces offers 
the reader a liberal education in military procurement. It examines in 
depth, and with judicious understanding, the following: procurement of 
aircraft; budgeting and budgetary changes; contracting; design changes; the 
nature and development of the aircraft industry; manufacturing techniques, 
especially in the introduction of mass production into the aircraft industry, 
and problems in the use of automobile assembly plants for making aircraft; 
and the War Department's relations with Congress and the Comptroller. 
Professor Holley recognizes the broad sweep and interrelationship of politi- 
cal, economic, legal, and military problems, and stresses the importance of 
organization within both government and industry. The volume focuses 
upon problems inherent in procurement, but does not concern itself with 
air or ground force doctrine. Its subject matter is the procurement, not 
the employment, of air power. Because Professor Holley's volume offers 
concrete examples of problems involved in the design and purchase of 
complicated and expensive items of military equipment over a period of 
years, the experiences described should profit the officer engaged in pro- 
curement of missiles and aircraft today as well as the student of logistics, 
and will add immeasurably to the thoughtful citizen's understanding of 
national defense. 



Washington, D.C. 
5 November 1962 



HAL C. PATTISON 
Brigadier General, USA 
Chief of Military History 



Vll 



The Author 



Irving Brinton Holley, jr., received his B.A. from Amherst College and 
his M.A. and Ph.D. from Yale University. Enlisting in the Army, he rose 
to the grade of staff sergeant as an instructor in aerial gunnery, attended 
the Army Air Forces Officer Candidate School at Miami Beach, Florida, 
and graduated in April 1944. After serving as a gunnery officer in the 
First Air Force, he was assigned to technical intelligence at Headquarters, 
Air Materiel Command, Wright Field, Dayton, Ohio. From 1945 to 1947 
he was a member of the faculty of the Industrial College of the Armed 
Forces. 

In 1947 Mr. Holley accepted an appointment in the History Depart- 
ment of Duke University, where he is now a full professor. He holds a 
commission as a lieutenant colonel, USAF Reserve, and has continued to 
take an active part in reserve affairs. 

Professor Holley is the author of Ideas and Weapons, published by the 
Yale University Press in 1953, as well as numerous articles and reviews in 
scholarly publications. 



viii 



Preface 



Readers have a right to expect something in the way of answers to two 
basic questions before they read further in this volume: What is it about 
and for whom is it written? Although these questions seem simple enough, 
neither of them can be adequately answered without considerable elabora- 
tion. 

This book is about procurement in the broadest sense of the word. To 
be sure, the mechanics of purchasing and contracting are considered at 
some length, but the term procurement is here used to embrace far more 
than is generally implied by the word itself. The chapters that follow 
attempt to present the problem of air materiel procurement as a whole: 
the computation of requirements, the evolution of internal organization, 
the relationship and accommodation of conflicts between executive and 
legislative agencies, the character and capabilities of the aircraft industry, 
and many other similar facets are presented as the vital context without 
which such topics as contract negotiation and facility expansion can 
scarcely be understood. 

Above all, the author wishes to make clear that he did not undertake 
this book as an exercise in fulsome praise. He may have leaned in the 
opposite direction, emphasizing unduly the failures while neglecting the 
successes. But if this kind of history is to be useful and meaningful, it 
cannot afford to devote its limited number of pages in adding to the paeans 
of praise already in print. If the nation is to escape or even minimize the 
blunders of the past, it cannot neglect to study its mistakes. 

If the author has been frugal with praise, he has been no less cautious 
in apportioning personal responsibility when discussing some of the more 
egregious failures that marked the procurement program. The search for 
scapegoats makes exciting journalism and can provide many a political foot- 
ball, but it misses the point. The really meaningful question to be asked 
of disaster is not "Who was to blame?" but "What were the problems?" 
Personal censure and recrimination are fruitless; to illuminate even a few 
of the problems encountered is to help the future avoid the pitfalls of 
the past. 

In the main, then, individuals are accorded their privacy— in success as 
well as in failure. The major exceptions to this rule are the leaders, both 
political and military, in the highest echelons. Of necessity, as they them- 
selves must recognize only too well, they forfeited their private lives when 



IX 



they climbed into the realm of folk heroes— or villains— and became a part 
of the public domain. 

This book was not written for the procurement specialist. Nor was it 
written exclusively for the participants who helped shape many of the events 
described; for the most part these individuals have left the scene and a 
rising generation has taken their places. It is this new generation in par- 
ticular to which this book is addressed. The author has kept his sights 
consciously trained upon the ambitious young staff officer of tomorrow as 
well as the general reader. His aim is to provide the broadest possible 
synthesis of the problems of air arm procurement, giving a comprehensive 
or general view* of the sort required by those who aspire to exercise com- 
mand as general officers. But the issues discussed here should have mean- 
ing for many more readers than those in the limited circle of air arm staff 
officers, regular and reservist, seeking advancement; the themes developed 
in this book should provide insights for officers in all the services. More- 
over, since military expenditures constitute a major portion of the na- 
tional budget, no student of public policy who would understand the impli- 
cations of this spending in the national economy can ignore the intricacies 
of air arm procurement. 

Because this book has been written primarily for a generation that did 
not experience the mobilization effort of the World War II years, the author 
has spelled out in considerable detail the peacetime background of both 
the air arm and the aircraft industry. Participants in the wartime procure- 
ment program may feel this belabors the obvious, but the author is con- 
vinced that the procurement story of the war era cannot be comprehended 
unless one is well aware of the assumptions and premises generally held at 
the time. And precisely because the attitudes were widely if not univer- 
sally shared, they were often unstated. What everyone takes for granted 
no one bothers to record. Unless this milieu can be recaptured, a subse- 
quent generation will misunderstand the events of the war years and be 
led to false conclusions regarding the lessons to be learned from them. 

For example, the attitude of the aircraft manufacturers toward plant 
expansions in 1940 is comprehensible only when seen against the events of 
the depression just preceding. Readers in the postwar world, who know 
the aircraft manufacturers only as industrial giants at the top of the national 
economy, can appreciate the procurement problems of World War II only 
when they are placed in the context of an industry ranking in fourteenth 
or fifteenth place among the nation's economic groups. Or again, the deci- 
sions and plans of responsible air arm officials, particularly in the crucial 
prewar months from September 1939 to December 1941, can best be appre- 
ciated when seen in the context of their long relationship with Congress 
and the Comptroller General. 

One final caveat remains to be stated. This volume makes no claim of 
being a definitive account of the subject treated. While it is planned as an 
integral work, one to be read as an inclusive account of the procurement 



x 



story as a whole, the writer has sought to avoid needless duplication of the 
studies done by others in this field, notably R. Elberton Smith, The Army 
and Economic Mobilization, a volume in the official history series, 
UNITED STATES ARMY IN WORLD WAR II, and Alfred Goldberg's 
chapters in W. F. Craven and J. L. Cate, THE ARMY AIR FORCES IN 
WORLD WAR II, Volume VI, Men and Planes. With the needs of officers 
preparing staff papers particularly in mind, the author has been at pains to 
insert numerous cross references to those and many other published sources 
bearing on the subjects discussed. The reader will also find, in addition to 
the usual documentation, a large number of citations leading to archival 
materials useful to those who wish further illustrative matter for staff 
studies. 

The author will be more than gratified if interested readers are suffi- 
ciently provoked to prove that his judgments and interpretations require 
revision at some points. If this volume stimulates further study and a 
continuing analysis of the problems of procurement, it will have served 
its purpose well. 

Whatever mistakes Buying Aircraft: Materiel Procurement for the Army 
Air Forces may contain, whether of fact or interpretation, responsibility 
rests firmly upon the author and not upon the literally hundreds of indi- 
viduals who shared in one way or another in the preparation of this 
volume. For their help, however, the author wishes to express his sincere 
appreciation. 

While the author is heavily indebted to the many writers of monographs 
and special studies cited repeatedly in the footnotes, he wishes to single out 
as particularly noteworthy the work done by R. R. Russel at Wright Field 
and J. P. Walsh in the Eastern Procurement District headquarters. 

The following individuals, all at one time or another associated with 
OCMH, read and criticized the entire manuscript: Dr. Kent Roberts 
Greenfield, Dr. Stetson Conn, Dr. John Miller, jr., Col. Seneca W. Foote, 
and Mr. R. Elberton Smith. If their strictures on early drafts were occa- 
sionally painful, the author is conscious that the net effect of their efforts 
has been highly constructive. Equally welcome were the evaluations of 
two outsiders, Mr. T. P. Wright, vice president of Cornell University, and 
General O. R. Cook, USAF, Retired, both of whom read drafts of the 
book and prepared elaborate critiques from no other motive than a life- 
long dedication to the problems of national defense. 

Among those who went far beyond the requirements of their official 
positions to facilitate the author's research, the following merit particular 
attention: at Wright Field, Dr. Paul M. Davis and his staff in the Historical 
Office; at the Industrial College of the Armed Forces, Dr. Marlin S. 
Reichley and Miss Clara J. Widger with her library staff; at the National 
War College, George Stansfield; in the Office of the Chief of Military His- 
tory, Mr. Israel Wice and his staff, Dr. Robert W. Coakley, and Dr. 
Richard M. Leighton; at the Air Force Historical Division Liaison Office, 



xi 



Dr. Alfred Goldberg; at the World War II Records Division, National 
Archives and Records Service, General Services Administration, all those 
anonymous people who repeatedly performed prodigies in locating obscure 
and elusive documents from the mounting millions stored there. And for 
assistance at virtually every turn over the several years during which this 
book was in preparation, the author wishes to extend his particular thanks 
to Mrs. Constance McL. Green, Miss Carol S. Piper, and Miss K. E. Brand. 

The heavy task of editing the manuscript fell upon Miss Mary Ann 
Bacon. If the author has bitterly complained that her blue pencil cut off 
all the colorful peaks in his prose, he cheerfully concedes that she has also 
managed to fill in most of his otherwise incomprehensible prose valleys. 
For this he is truly appreciative, as he is to Mrs. Marion P. Grimes, the assist- 
ant editor. Mrs. Norma Heacock Sherris arranged the photographs. 

Finally, the author wishes to acknowledge the patience, understanding, 
and help rendered by his wife, Janet Carlson Holley, throughout the years 
this volume was in preparation. 

Washington, D.C. IRVING BRINTON HOLLEY, JR. 

5 November 1962 



xii 



Contents 



Chapter Page 

I. INTRODUCTION 3 

II. THE AIRCRAFT INDUSTRY ON THE EVE OF WORLD 

WAR II 6 

A Survey of the Industry 6 

The Market for Aircraft 10 

Research and Development 22 

Production 26 

Financing the Aircraft Industry: 1934-38 33 

III. CONGRESS AND THE AIR ARM 43 

Authorized Strength: How Many Aircraft? 44 

Authorizations, Appropriations, and Aircraft 63 

IV. PROCUREMENT LEGISLATION, ORGANIZATION, AND 

ADMINISTRATION 80 

Organic Legislation for the Procurement of Aircraft ... 80 

The Organization of the Air Arm for Procurement ... 93 

The Administration of Procurement 106 

V. PROCUREMENT UNDER THE AIR CORPS ACT .... 113 

Procurement: 1926-34 113 

Congressional Cloudburst 119 

New Procurement Policy 128 

VI. AIRCRAFT PROCUREMENT ON THE EVE OF WORLD 

WAR II 132 

The New Policy Reconsidered 132 

The War Department Seeks a Solution 143 

Peacetime Procurement: A Retrospect 146 

VII. PLANNING FOR INDUSTRIAL MOBILIZATION .... 150 

The Problem 150 

The War Department and Industrial Mobilization .... 151 

The Air Corps Organization for Mobilization Planning . . 153 

Air Corps Mobilization Planning 155 

Air Corps Planning in Perspective 166 



xiii 



Chapter Page 

VIII. THE TIDE TURNS 169 

The President Proposes; Congress Disposes 169 

The First Expansion Program 175 

The Search for a Yardstick 186 

IX. FOREIGN POLICY, POLITICS, AND DEFENSE 194 

Politics and Armament 194 

Aircraft Exports and National Defense 196 

Aircraft Exports and Mobilization Planning 205 

X. REQUIREMENTS 209 

An Essay on Requirements 209 

Origin of the 50,000 Figure 221 

XI. 50,000 AIRCRAFT 229 

From Slogan to Program 229 

There's Danger in Numbers: The President's "Must Pro- 
gram" 237 

Return to Reality 243 

XII. ORGANIZING FOR PRODUCTION 247 

Posing the Problem 247 

Evolution of an Organization 249 

XIII. LEGISLATION FOR PROCUREMENT 274 

Wartime Buying With Peacetime Laws 274 

Improvising Legislation in a Crisis 283 

XIV. THE PROBLEM OF INDUSTRIAL CAPACITY 290 

The Beginning of Facility Expansions 290 

Enter Detroit: Air Arm Use of the Automobile Industry . 304 

Expansion or Conversion? 316 

The Facilities Program: An Appraisal 324 

XV. THE NEGOTIATION OF CONTRACTS 330 

The Transition to Wartime Buying 330 

The Negotiation of Contracts 337 

The Administration of Contracts 364 

XVI. THE COST-PLUS-FIXED-FEE CONTRACT: 

NEGOTIATION AND ADMINISTRATION 372 

Some Revolutionary Implications 372 

The Fixed-Fee Problem 374 

The Determination of Allowable Costs 379 

Auditing and Accounting 390 

The Problem of Property Accountability 397 

The Relation of Primes to Subs 401 

The Conversion of Fixed-Fee Contracts 410 



xiv 



Chapter 


















Page 


xvn. 


PRICE ADJUSTMENT 


■ 


■ 




- 


• 


• 


• 


421 




Escalator Clauses ........ 


* 


• 


■ 


• 


* 


• 




422 




Excess Profits and Voluntary Refunds . 


* 


• 




• 




• 


m 


428 




Statutory Renegotiation 


- 




• 


- 


- 


■ 


■ 


428 


XVTTT 


CONTRACT TERMINATION 




• 


■ 


- 






■ 


446 




The Background of Termination . , . 
















446 




The Character of the Termination Problem 




i 




* 




* 


447 




The Organization for Termination . . 


r 


* 


• 


r 




• 


* 


451 




Jome Illustrative Aspects of Administrate 


m 


• 


■ 


• 


» 


■ 




454 








- 




• 


■ 


i 




460 


XIX, 


ORGANIZATION FOR PROCUREMENT 




• 




• 


• 


* 


■ 


462 




Co-ordination,, Control, and Command . 


■ 


■ 


• 


• 


■ 


* 


- 


462 




Cross Procurement 




- 


■ 






■ 




4«n 




Centralization and Decentralization , . 


* 


• 


■ 


■ 


■ 


■ 


* 


487 


XX. 


PRODUCTION 


• 


• 


1 


» 








511 




The Problem Defined 




A 


ft 


■ 






• 


511 




The Dilemma of Mass Production . . 




1 


■ 


• 


■ 


* 




512 




Resolvi?ig the Dilemma 


m 


■ 


• 


- 


- 




* 


529 


XXI, 


THE PROCUREMENT RECORD . , . 


• 




- 




• 


■ 


■ 


548 




A Statistical Summation 








■ 


« 


* 


* 


548 




The Measure of Success 


- 


-* 






i 






552 




Counting the Cost 


- 


« 


- 


- 


- 




- 


556 




The Contribution of Industry .... 


■ 




• 




• 


I 


■ 


500 


XXII. 


SOME CONCLUDING OBSERVATIONS 


ON 


MILITARY 






PROCUREMENT 


- 


J. 






> 


I 




569 




What Is Air Arm Procurement? . . . 


■ 






• 


• 




• 


569 




Procurement and Politics 


• 


• 


• 


■ 


* 


- 




569 




Procurement Leadership in Wartime 




* 


• 




■ 






571 




Air Power and Organization , , . . 




* 


+ 


■ 


■ 




* 


572 



Appendix 

A. MEMBERSHIP IN THE AERONAUTICAL CHAMBER OF 

COMMERCE; 1938 575 

B. WARTIME PRODUCERS OF AIRCRAFT 576 

C. MAJOR PRODUCERS OF AIRCRAFT ENGINES: JULY 

1940-AUGUST 1945 . . 580 

BIBLIOGRAPHICAL NOTE 583 

GLOSSARY 588 

INDEX 595 



Tables 

No. Page 

1. Production of Aircraft Engines 7 

2. Comparative Importance of Military and Civilian Markets .... 21 

3. A Comparison o£ the Aircraft Industry With the Automobile 

Industry 27 

4. Percent of Earnings as Dividends and Surplus, Eighteen Top Aircraft 

Manufacturers: 1934-38 34 

5. Yearly Increment to Surplus or Deficit Compared With Yearly Incre- 

ment to Deferred Development Charges, Eighteen Top Aircraft 

Manufacturers: 1934-38 35 

6. Comparative Cost of Two-Engine and Four-Engine Bombers . . . 142 

7. B-24 Modifications at Willow Run 537 

8. Engine Production by Type: 1940-45 549 

9. Engine Production by Horsepower: 1940-45 549 

10. Propeller Production: 1940-45 549 

11. Number of Airplanes Procured by Army Air Forces, by Type and by 

Year of Acceptance: January 1940-December 1945 550 

12. Aircraft Deliveries to the AAF: July 1940-December 1945 .... 554 

13. Heavy Bombers Accepted by the AAF 555 

14. Total Military Aircraft Production of Four Major Powers: 1939-44- 555 

15. AAF Cash Appropriations and Expenditures: 1935-45 557 

16. AAF Expenditures by Major Categories: 1942-45 558 

17. Expenditures for Modifications and Research and Development: 

1942-45 558 

18. Comparison of Civilian Payroll to New Aircraft and Research and 

Development: 1938-41 559 

19. Average Unit Costs of Selected Aircraft: 1939-45 560 

20. Production of Turbojet Engines: July 1940-August 1945 .... 562 

21. Production of Automatic Controllable Pitch Propellers: July 1940- 

August 1945 563 

22. Distribution of Employment in Airframe Industry: April 1945 . . 565 

23. Direct Man-hours per Airframe Pound Accepted 565 

Charts 

1. Organization Chart Showing Channels of Communication Between 

the Secretary of War and the Air Corps 95 

2. Organization of OCAC, Washington Headquarters of Air Corps . . 96 

3. Materiel Division, Wright Field, Dayton, Ohio 98 

4. Composite Organization Chart Showing the Agencies Primarily Con- 

cerned With Air Materiel Procurement in the Two Decades After 

the Air Corps Act of 1926 103 

xvi 



No. Page 

5. Army Air Forces Organization: 9 March 1942 487 

6. Organization of the Materiel Command: 19 October 1942 .... 488 

7. Organization of the Resources Control Section of the Production Divi- 

. sion, Materiel Command: July 1943 489 

8. Army Air Forces Organization: 29 March 1943 490 

9. Hypothetical Learner Curve 536 

Illustrations 

U.S. Mail Plane Loading From Mail Truck 13 

National Advisory Committee for Aeronautics 24 

NACA Full-scale Wind Tunnel at Langley Field 25 

Hand Assembly of Stearman Primary Trainers 30 

The Morrow Board 47 

House of Representatives Committee on Military Affairs 60 

Maj. Gen. Oscar Westover 69 

Boeing B-17 76 

Douglas B-18 77 

Maj. Gen. M. M. Patrick 89 

Wright Field, 1935 100 

Wright Field, 1942 101 

Martin B-10 118 

Maj. Gen. Benjamin D. Foulois 121 

DC-2 Transports in Production 135 

B-17 and XB-15 149 

War Department Subcommittee of the House Appropriations 

Committee 176 

Secretary Louis A. Johnson 177 

Theodore P. Wright 192 

President Asks Congress for 50,000 Aircraft 226 

Curtiss XP-40 227 

British Spitfire 227 

Douglas A-26 . 244 

Martin B-26 245 

Lt. Gen. William S. Knudsen 256 

The B-24 306 

The B-25 307 

Brig. Gen. Charles E. Branshaw 466 

Maj. Gen. Kenneth B. Wolfe 469 

General Brehon B. Somervell 478 

Brig. Gen. A. J. Browning 479 

Secretary Robert P. Patterson 479 

Maj. Gen. Oliver P. Echols 479 

xvii 



Page 

Assembly Jig, B-24 Center Wing Section 525 

B-24 Assembly Line, Willow Run 526 

Boeing B-17 Assembly Line 541 

All photographs are from the Department of Defense except for the following: 
page 227, Air Force and Space Digest; pages 24, 25, 177, 192, and 479, National 
Archives; pages 306, 525, and 526, Ford Motor Company; and page 226, Harris 
and Ewing, Washington, D.C. 



xviii 



BUYING AIRCRAFT: 
MATERIEL PROCUREMENT 
FOR THE ARMY AIR FORCES 



CHAPTER I 

Introduction 



The strength and structure of the 
Military Establishment of the United 
States are responsibilities of the Amer- 
ican public expressing its will through 
Congress. Since the Army is an operat- 
ing agency with but limited voice in the 
formation of national policy, it is incum- 
bent upon departmental officials to sub- 
mit accurate and meaningful reports to 
the public and its representatives if they 
are to provide an effective legislative 
basis for the maximum in national se- 
curity at the least cost. 1 Unfortunately 
the information necessary for sound leg- 
islation has not always been readily avail- 
able. 

If the American public, congressmen, 
editors, and the man in the street held a 
number of serious misconceptions about 
the Army's air arm and its state of readi- 
ness on the eve of World War II, it may 
very well be that their erroneous im- 
pressions were derived from authorita- 
tive sources. General Malin Craig, the 
Chief of Staff, himself assured the people 
of the United States in his annual report 
of 1938 that Army planes were "equal, 



1 Those familiar with the preparation of annual 
reports within the Army might argue that no one 
should attach too much importance to such docu- 
ments, often prepared in haste and sometimes inac- 
curate. Nonetheless, that some officers recognized 
their potential importance is attested by the 1934 
annual report of Chief of Staff, General Douglas 
MacArthur, which is paraphrased above. 



if not superior," to any in the world. 2 
Perhaps the aircraft were superior, but a 
curious congressman might have been 
forgiven had he asked on what founda- 
tion this assurance rested. The Chief of 
Staff claimed that the outstanding per- 
formance of Army aircraft was "convinc- 
ingly demonstrated" by the flight of six 
Army bombers on a record-breaking 
journey to Argentina. 3 The long-dis- 
tance flight, spectacular and significant 
as it may have been at the time, was not 
proof of tactically superior aircraft. 
Even though the Chief of Staff's logic 
might be imperfect, the inquiring con- 
gressman might still conclude that all 
was well in the air arm— unless he read 
further in the official reports of the War 
Department for the year 1938. 

In commenting on the air arm dur- 
ing the fiscal year just past, the Assistant 
Secretary of War Louis A. Johnson dif- 
fered with his military colleague and 
sounded a warning. While the Army's 
aircraft in 1937 had been, "in general, 
the best and most efficient in the world," 
it now appeared that "our former tech- 
nical superiority" was "no longer clearly 
apparent." The tone of assurance in the 
Chief of Staff's boast of aircraft "unex- 
celled" by the military planes of any 



a Annual Report of the Secretary of War, 1938, 

P- 34- 
» Ibid. 



4 



BUYING AIRCRAFT 



nation was not to be found in Johnson's 
report: 

"Recent advances in other countries 
have equalled if not exceeded our efforts. 
We have known for some time that for- 
eign nations far surpassed us in the num- 
ber of military aircraft at their disposal 
but we also knew that we led the field 
technically. It now appears that our re- 
search and development programs must 
be accelerated if we are to regain our 
position of technical leadership." 4 Fur- 
ther, current production programs as 
well as those contemplated for wartime, 
he flatly declared, fell far short of pro- 
viding even a minimum number of air- 
craft that "any realistic view of the prob- 
lem would show to be necessary." 5 

If the Chief of Staff and the Assistant 
Secretary of War appeared to contradict 
each other, Secretary of War H. H. 
Woodring did little to clarify the pic- 
ture. Looking back five years, he re- 
called that the rest of the world was 
"setting a fast pace" in the development 
of air power, while the United States 
was "floundering along in the ruck." 6 
By 1938 the Secretary of War felt free 
to report a "far more encouraging sit- 
uation." 7 This was a cryptically vague 
and entirely relative characterization 

4 Ibid., p. 26. 
s Ibid., pp. 26-27. 

e Ibid., pp. 2-3. Compare this statement by Sec- 
retary of War Woodring with that on page 10 of 
Final Report of War Department Special Committee 
on Army Air Corps (Baker Board Report), 18 July 
•934 (see below, |Chapter III)| , which found U.S. 
combat aircraft in 1934 "superior to those of any 
other country." Jane's All the World's Aircraft (Lon- 
don: Sampson Low, Marston and Co., Ltd., 1935) 
whose caustic editor, C. G. Grey, was certainly never 
one to give an unduly favorable view of U.S. aviation, 
placed this country at least two years in advance of 
Europe in 1934. 

7 Ibid., pp. 2-3. 



that might have lent support either to 
the optimistic view held by the Chief of 
Staff or to the pessimistic one held by 
the Assistant Secretary of War. 

What, then, was the uninitiated citi- 
zen to believe? One official reassured 
him, another warned him of imminent 
danger, yet another left him undecided. 
An inquirer might indeed conclude that 
freedom of expression prevailed in the 
War Department. Useful and thought 
provoking as this diversity of ideas may 
have been within the Department, the 
contradictory reports published for pub- 
lic distribution indicated that Congress, 
the President, and the man in the street 
would have to seek further for the in- 
formation so indispensable to an in- 
formed and intelligent national policy 
on air power. This volume may make a 
contribution toward that quest. 

Did the United States have a superior 
air force on the eve of World War II? 
The question is now largely academic, 
but it may well be asked because it poses 
another, more useful question: exactly 
what constitutes a superior air force? 
Air power is something more than a 
collection of aircraft, the ground instal- 
lations necessary to keep them flying, 
and the trained men needed to maintain 
them in action. In addition, an air arm 
requires a body of doctrine, for doctrines 
regarding the strategic and tactical ap- 
plication of air power are as fundamen- 
tal as the bombers and fighters that exe- 
cute a wartime mission. Yet even to 
stop here would be to confine the defi- 
nition of an air force, by implication at 
least, to the limits so frequently encoun- 
tered in newspapers and newscasts. Al- 
most equally important, and less fre- 
quently mentioned in public debate, are 



INTRODUCTION 



5 



a host of other ingredients that contrib- 
ute to the sum total called air power. 
Among these are the productive capacity 
of the nation's aircraft industry and its 
potential for expansion, the procedures 
and practices by which the necessary 
funds are secured from Congress, as well 
as the forms and methods governing the 
procurement of materiel. 

In short, although the continuing na- 
tional debate on air power policy gen- 
erally takes place in terms of the quest 
for quantitative and qualitative superi- 
ority, other factors essential to a superior 
air force cannot be slighted with im- 
punity. And in one way or another, the 
general subject of procurement is re- 
lated to all of them. It is no exaggera- 
tion to suggest that one cannot truly un- 



derstand the problem of air power with- 
out first coming to appreciate something 
of the enormous complexity of procure- 
ment. 

The pages that follow seek to illus- 
trate the almost infinite ramifications of 
the procurement process and its intimate 
relationship with virtually every other 
activity of an air force. In addition, the 
exposition should make it clear that the 
elements of air power are never static. 
Science probes further horizons, tech- 
nology advances, and novel weapons are 
perfected that require revised concep- 
tions for efficient use. To survive in the 
ultimate competition of war, an air force 
must continue to perfect its techniques 
of procurement no less than its doctrine 
and its weapons. 



CHAPTER II 



The Aircraft Industry on the Eve of 
World War II 



A Survey of the Industry 

A cross-section view of the nation's air- 
craft enterprises on the eve of World War 
II reveals that the industry was in fact a 
complex of manufacturing enterprises, 
not all of which were primarily concerned 
with airplanes. While airplane manufac- 
turers as such constituted the aircraft in- 
dustry in the popular sense, in reality the 
term was far more inclusive, covering not 
only manufacturers of airframes but all 
those concerns producing engines, acces- 
sories, and component parts or subassem- 
blies. 

The designation aircraft industry thus 
actually embraced four rather distinct 
groups. First and best known were the 
airframe manufacturers. These firms de- 
signed new aircraft and produced them, 
sometimes fabricating nearly all of the 
items within their own manufacturing or- 
ganizations and sometimes merely assem- 
bling components and subassemblies 
made elsewhere. 

Engine manufacturers constituted a 
second group. During World War I, air- 
craft engine production was virtually en- 
feoffed to the automotive industry. On 
the eve of World War II this was no 
longer true. By then seven or eight man- 



ufacturers specialized in the produc- 
tion of engines. 1 Two of these firms— 
the Wright Aeronautical Corporation at 
Patterson, New Jersey, and the Pratt and 
Whitney Aircraft Division of the United 
Aircraft Corporation at East Hartford, 
Connecticut— dominated the field in 
terms of numbers produced, dollar vol- 
ume of business, and units of horsepower 
delivered. 'Table i\ A third concern, 
the Lycoming Division of the Aviation 
Manufacturing Corporation at Williams- 
port, Pennsylvania, shared significantly 
in producing engines for trainers. 



1 House Subcommittee of Committee on Appro- 
priations, Hearings on Supplemental Military Estab- 
lishment Bill for 1940, May-June 1939, pages 
319-20, mentions the following engine manufac- 
turers: Allison Engineering Co., Indianapolis, Ind.; 
Continental Motors Corp., Detroit, Mich.; Jacobs 
Aircraft Engine Co., Pottstown, Pa.; Lycoming Divi- 
sion, Aviation Manufacturing Corp., Williamsport, 
Pa.; Ranger Engineering Corp., Farmingdale, Long 
Island, N. Y.; Pratt and Whitney Aircraft Division, 
United Aircraft Corp., East Hartford, Conn.; and 
Wright Aeronautical Corp., Patterson, N. J. To this 
group should be added; Aircooled Motors (Frank- 
lin), Kinner Airplane and Motor Co., and Menasco 
Manufacturing Co.. all producing engines in a class 
below a6o horsepower. Of the firms listed above, 
Allison, Pratt and Whitney, and Wright Aeronautical 
produced engines with horsepower ratings above 
1000. For a contemporary survey of the engine in- 
dustry, see Aviation, February 1939, pages 55ft. 



AIRCRAFT INDUSTRY ON THE EVE OF WORLD WAR II 
Table 1— Production of Aircraft Engines 



7 



M anufacturer 


1929 


1934 


1936 


Number 


Percent of 
Total 


Number 


Percent of 
Total 


Number 


Percent of 
Total 


Curtiss-Wright 


2, 148 


29 


1, 125 


41 


1,404 


33 


Pratt and Whitney 


2,010 


27 


859 


31 


1,300 


31 


Other firms 


3,220 


44 


752 


28 


1,533 


36 



Source: W. B. Harding, The Aviation Industry, pp. 25-26. 

Subcontractors constituted a third 
group within the aircraft industry. Of 
vital significance in wartime, subcontrac- 
tors in peacetime were not only fewer but 
not so well recognized as a definite group 
with distinctive characteristics. 2 There 
were very few entirely vertical corpora- 
tions in the aircraft industry producing 
airframes, engines, and all major compo- 
nents, but most airplane manufacturers 
did not rely heavily upon subcontractors 
for components and subassemblies. Fac- 
tors such as the absence of manufacturers 
willing to accept subcontracts, the limited 
number of units in production runs, the 
need for close tolerances in precision 
work, and the necessity for a high order 
of production co-ordination in an area of 
frequent and rapid design change, as well 
as the desire of the airframe manufac- 
turers to find employment for idle sec- 
tions of their own production forces, all 
contributed to the peacetime practice of 
minimizing subcontract work. Even such 
a relatively large-scale manufacturer as 
the Boeing Aircraft Corporation fabri- 
cated all dies for presses, hammers, and 
drawbenches in Boeing shops. 3 When 
the emergency arrived and it proved ad- 



vantageous to depend upon an increasing 
number of subcontractors, the lack of 
widespread peacetime use of subcontrac- 
tors made wartime expansion in the field 
difficult. However, even though sub- 
contractors were few in number during 
the prewar years, they did constitute a 
distinct part of the aircraft industry. 

Vendors or suppliers were the fourth 
and last group of the aircraft industry. 
While subcontractors fabricated parts 
and assemblies to order by special con- 
tract with an airframe or engine manu- 
facturer, vendors supplied ready-made 
items off the shelf. Such standard and 
semistandard miscellaneous items as 
wheels, pulleys, rivets, instruments, con- 
trol cables, turn buckles, and the like 
made up the vendor's stock in trade. 
Some vendors, such as the Sperry Corpo- 
ration, specialized in the field of instru- 
ments and controls; others concentrated 
on difficult-to-manufacture items such as 
exhaust stacks and collector rings or oleo 
strut shockabsorbers. 4 Among the vendors , 



2 For the role of subcontractors in wartime, see 
below jpp, 401-10TI 

3 Aerodigest (January 1936), pp. s6-xg. 



4 William Barclay Harding, The Aviation Industry 
(New York: C. D. Barney and Co., 1937), pages 30-31, 
lists the vendors doing a major portion of their busi- 
ness in aviation during 1937 as follows: Air Asso- 
ciates, Aero Supply, Breeze Manufacturing Co., Brew- 
ster Aeronautical Corp., Cleveland Pneumatic Tool 
Co., Irving Airchute, and Sperry Corp. Propeller 
manufacturers might be listed with this group except 
that the most important happen also to be aircraft 



8 



BUYING AIRCRAFT 



one will serve as a representative exam- 
ple. Air Associates, Incorporated, com- 
bined manufacturing with a mail order 
house and general store business in air- 
craft parts. With one store in New York, 
one in Chicago, and a third on the west 
coast, Air Associates could supply such 
standardized items of aircraft hardware 
as fuel strainers, high pressure hydraulic 
pumps, relief valves, safety belts, land- 
ing wheels, and nuts, bolts, and screws for 
immediate delivery. Catalogues distrib- 
uted to 20,000 buyers in a world market 
attested the scale of the firm's operations. 5 
Vendors, whether supplying one complex 
specialty item such as autopilots or ten 
thousand minor hardware items from 
rivets to landing wheels, composed a sep- 
arate and important segment of the air- 
craft industrial world. 

While the four separate groups— air- 
frame manufacturers, emrine manufac- 
turers, subcontractors, and vendors— did 
exist as identifiable entities, not every 
concern can be neatly tagged as belong- 
ing to one or another. Vertical organiza- 
tions such as the Curtiss-Wright Corpo- 
ration cut sharply across the groups, 
producing engines, airframes, and many 
component parts within a single manage- 
rial domain. Some vendors did subcon- 
tract work in addition to selling items 
from stock by catalogue. Moreover, as if 
to foreshadow a practice that was to be- 
come a problem during World War II, 

or engine manufacturers. Three important propeller 
manufacturers were Hamilton-Standard (a United 
Aircraft Corp. subsidiary), Curtiss, and Lycoming. 
Bendix Aviation Corp. was a leading vendor in the 
years immediately before the war, but only about a 
quarter of its total business lay in the aviation field; 
therefore, along with RCA, which supplied radio 
components, it cannot be clearly designated as an 
integral component of the aircraft industry. 
& Aerodigest (January 1932), pp. 36ft. 



there were occasions when two airframe 
manufacturers did subcontract work for 
each other, thus becoming prime con- 
trators and subcontractors at the same 
time. 

That the business of aircraft produc- 
tion was never an integrated enterprise 
and never became a single, harmonious, 
smoothly functioning group working en- 
tirely within the team rules of a trade or- 
ganization is perhaps best reflected in the 
experience of the industry with the Na- 
tional Recovery Administration (NRA) 
in the early thirties. The various com- 
ponent portions of the industry had such 
difficulty in finding common ground for 
agreement that promulgation of an ac- 
ceptable code proved impossible. When 
the Supreme Court toppled the whole 
NRA structure in 1935, the aircraft in- 
dustry was still without a code. 6 

Although the aircraft industry was 
thus in reality a complex of several in- 
dustries, the airframe manufacturers defi- 
nitely held the center of the stage. As 
design initiators and as synthesizers of the 
contributions from all the other groups 
in the industry, the airframe manufactur- 
ers necessarily require more attention 
and closer study of who they were, where 
they were located, and what their pecu- 
liar problems were on the eve of the war. 

Membership in the Aeronautical 
Chamber of Commerce during 1938 
amounted to some 86 manufacturers. 
This included 8 engine firms, 34 airframe 
firms, and 44 accessory firms. Of the air- 
frame firms, more than half built only 
small, low-powered civilian airplanes; 14 
handled both civilian and military types; 

L. W. Rogers, "Functions of the Aeronautical 
Chamber of Commerce," Journal of Air Law (Octo- 
ber 1935). 



AIRCRAFT INDUSTRY ON THE EVE OF WORLD WAR II 



9 



and 4 worked almost exclusively on mili- 
tary contracts. 7 {{See Appendix A]j ) This 
listing does not include firms that for one 
reason or another did not join the Aero- 
nautical Chamber of Commerce. The 
nonmembers were by no means all un- 
important and small-scale producers, in- 
cluding among their numbers such widely 
different manufacturers as Rearwin Air- 
craft and Engines, Inc., in the light air- 
plane field and Glenn L. Martin in the 
large transport and heavy bomber field. 

When war came, the nation had about 
eighteen to twenty manufacturers with 
considerable experience in building mili- 
tary aircraft and about the same number 
whose production, though largely in the 
light airplane field, would qualify them 
as experienced in component and sub- 
assembly fabrication. Taken together, 
these manufacturers comprised the air- 
frame industry; their skills and tech- 
niques would provide the essential basis 
for the nation's wartime achievements in 
aircraft production. 8 

A glance at a map of the United States 
will show how the prewar industry was 
located about the country. There were 
four loosely defined areas of concentra- 
tion: those on the west coast from Los 
Angeles and San Diego to Seattle; those 
on the east coast in an area of three or 
four hundred miles about New York 
(the Hartford-Buffalo-Baltimore axis); 
the Detroit-Akron-Cincinnati triangle; 
and the Wichita- Kansas City-St. Louis 
triangle. Beyond the fact that the east 
coast area produced most of the engines 
and the west coast strip turned out a ma- 



jority of the airframes, no very clear pat- 
tern of production by functional types 
according to geographic location is dis- 
cernible. Such widely dispersed plants 
as Boeing in Seattle, Douglas in Santa 
Monica, and Martin in Baltimore all pro- 
duced bombers. 

In the light of subsequent wartime 
pressures for "strategic dispersal," it 
should be profitable to digress here mo- 
mentarily to consider why the nation's 
aircraft industry grew up as it did. As in 
the case of many another new business, 
irrational factors such as the sheer acci- 
dent of the founder's residence probably 
decided the location of many plants. 
Few, it appears, made their decisions 
after a careful weighing of all considera- 
tions as did Martin before moving to a 
site near Baltimore. 9 Some selected a site 
because local capital was available. 
Douglas is reported to have been moved 
by such an inducement. In other cases 
the presence of other aircraft plants and 
a pool of trained labor helped determine 
site selection. Occasionally, as in the 
case of Wright Aeronautical, a site was 
chosen because local businessmen made 
offers of excellent facilities such as a new 
factory or free use of a municipal flying 
field. Boeing is said to have gone to Seat- 
tle to be near the spruce supply so essen- 
tial in early aircraft. 10 Year-round flying 
weather and the presence of the big Navy 
air arm installation at San Diego helped 
attract Consolidated to California. 11 
There is no evidence to show that stra- 



' House Subcom of Com on Appropriations, Hear- 
ings, Supplemental Military Establishment Bill for 
1940, pp. 31 9-30. 

8 Air Commerce Bulletin (15 May 1938), p. 280. 



Glenn L. Martin, "Development of Aircraft 
Manufacturing," Royal Aeronautical Society Journal 
(October 1931), p. 894. 

10 Denis Mulligan, Aircraft Manufacture in Chi- 
cago (Chicago, 1939), pp. 30-32. 

11 Business Week (February as, 1936), p. 44. 



10 



BUYING AIRCRAFT 



tegic considerations played any part in 
plant location before 1939. 

When the war broke out in Europe in 
1939 the nation's airplane builders were 
represented in some forty firms whose 
products ranged from puddle jumpers to 
four-engine bombers and whose factories 
were located anywhere from Hartford to 
Seattle. Large or small, east coast or west, 
all these manufacturers faced problems 
of marketing, research and development, 
production, and financing that, differing 
in degree, were nonetheless common to 
the aircraft industry as a whole. A de- 
tailed discussion of these four fundamen- 
tal problem areas is needed to help lay 
the basis for an appreciative understand- 
ing of the aircraft industry with which 
the nation entered World War II. 

The Market for Aircraft 

In the aircraft industry in the United 
States the curve of aircraft production has 
reflected the curve of demand rather ac- 
curately—at least for the period following 
the market crash of 1929 and during de- 
pression when manufacturers learned 
that frequent design change and high 
unit costs made the accumulation of un- 
sold items in stock an almost certain pre- 
lude to disaster: 12 



Year 
1 gas. 



Number 
of Units 

263 
■ ■ 743 
. . 377 
.. 789 



Year 



Number 
of Units 



1936 1,186 

1927 '.995 

1928 4.346 

19*9 

1930 3.437 



1931 3,800 

•93= >.396 

1933 ".324 

«934 '.615 

'935 i>7>° 

1936 3.010 

"937 3.773 

1938 3.623 



Observed superficially, these figures 
would seem to tell little more than the 
rise and fall of sales in phase with the 
business cycle of the nation, booming in 
1929, hitting bottom in 1933, then stag- 
ing a comeback, but still far below 1929 
levels at the end of the period. Like most 
statistics, however, these figures repre- 
senting totals of annual production are 
deceptive. 

Mere numbers, lumping four-engine 
bombers with two-place puddle jumpers, 
fail to provide the essential truth. To 
reduce the annual production totals into 
meaningful segments, one must ask for 
whom the aircraft were produced. In 
broadest terms there are three markets 
for the industry: the domestic market for 
civilian aircraft, the domestic market for 
military aircraft, and the export market 
for both of these types. Each constitutes 
a rather distinct problem. 

Military aircraft sales, although smaller 
in number of units than civilian sales, ac- 
counted for the larger portion of the in- 
dustry's dollar volume. For example, in 
1928 the 1,219 military planes sold were 
valued at $19,000,000; in 1933, 466 at 
$9,000,000; and in 1937, 949 at $37,000,- 
000. In the field of civilian aircraft, the 
figures for the same years were: 3,542, 
$17,000,000; 591, $6,000,000; and 2,281, 
$ig,ooo,ooo. 13 



12 Civil Aeronautics Administration (CAA), Sta- 
tistical Handbook 1948, p. 43. 



13 Figures are from E. W. Axe and Co., Inc., The 
Aviation Industry in the United States, Axe-Hough- 
ton Economic Studies, Series B, No. 6 (New York, 
1938) (hereafter cited as Aviation Industry in the 
US.), page 70, and Automotive Industries, February 
23, 1935, page 295, and February 26, 1938, page 262. 
Values shown do not include parts. It will be noted 
that the figures given here do not ad d up t o the 
production totals given in the earlier Itable.l The 
difference is accounted for by variant systems of 
enumeration used by the two compilers, one listing 



AIRCRAFT INDUSTRY ON THE EVE OF WORLD WAR II 



11 



Virtually the same pattern prevailed in 
the field of aircraft engines. 14 Clearly, 
military sales, whether for domestic or 
export destinations, constituted the most 
important element of the aircraft market 
even during the years of peace from 1928 
to 1938. Without denying the impor- 
tance of civilian aircraft to the health of 
the aircraft industry, any appraisal that 
fails to take full cognizance of the pre- 
dominating role of the military market 
will be entirely misleading. Bearing in 
mind this relatively greater importance 
of production for military users, it will 
be easier to retain an adequate perspec- 
tive when discussing, each in its turn, the 
three major divisions— civilian, export, 
and military— of the aircraft market. 

The Domestic Civilian Market 

Just as it is essential to separate civilian 
from military sales to perceive the eco- 
nomic realities of the whole aircraft mar- 
ket, so too the civilian market must be 
subdivided. On the eve of the Avar there 
were in the United States more than 
20,000 licensed pilots and 10,000 licensed 
aircraft. 13 However, these figures may 
give a false impression. In a total of 1 ,823 



units produced, the other listing units sold, including 
items from inventory. Moreover, some items listed 
as export sales represented aircraft sold to buyers 
in the United States; the same items were listed 
again in the compilation of export sales. 

1-4 During the twelve-year period from 1926 
through 1937, civilian aircraft sales exceeded military 
sales (dollar volume) during two years only: 1989 
and 1QH4. In 1930 sales were about equal. See n, 
1 13, aboveT| See also Barron's (February 3, 1936), pp. 
7-10, table. 

15 Bureau of the Census, Statistical A bstract of the 
United States 1939, p. 433. 



civilian aircraft produced in 1938, only 
53 were multiengine units. Expressed in 
other terms, the aircraft industry turned 
out 1,745 units in the one- to five-place 
category, but only 42 units with capacities 
ranging from five passengers up. 16 If this 
appears to suggest that small aircraft dom- 
inated the picture, one should note that 
the larger aircraft represented an average 
unit value of nearly $63,000, whereas the 
average unit value of all the others 
amounted to only a little more than 
$3,500. 17 Therefore, the most important 
single element of the civilian market lay 
in the sale of multiengine aircraft to com- 
mercial carriers or airlines. To under- 
stand the character of this key civilian 
market, so important to the general 
health of the aircraft industry, one must 
look for the factors contributing to the 
sale of transport aircraft in the between- 
wars period. 

By 1938 regularly scheduled commer- 
cial airline operations in the United 
States were "big business," even if far be- 
low the railroads in capitalization, ton- 
nage carried, and almost every other basis 
of comparison. In that year some twenty- 
odd domestic airlines operated along 
30,000 route miles crisscrossing the en- 
tire nation. Something of the scale of 
operations attained by these carriers is 
indicated in the fact that they employed 
almost 10,000 people, including 1,135 P*" 
lots and copilots, to handle well over a 
million passengers a year. Revenue from 
these operations totaled 40-odd million 
dollars. And this, it should be noted, in- 
cluded domestic carriers only. Two 



16 CAA, Statistical Handbook 1948, p. 51. 
1T Aviation Industry in the US., p. 80. 



12 



BUYING AIRCRAFT 



United States international or overseas 
carriers employed 4,000 more people to 
carry 100,000 passengers over a world net- 
work of 35,000 route miles. 18 By virtu- 
ally any measuring stick— route miles, pas- 
sengers carried, or mail ton-miles— the 
airlines of the United States stood far 
above those of the other powers. 19 These 
achievements stand out more vividly 
when one recalls that only a decade ear- 
lier the nation's entire air carrier busi- 
ness involved 34 operators of short lines 
employing 1,500 people, including 300 
pilots, to handle an annual total of 48,000 
passengers. 20 

In the decade of rapid growth between 
1928 and 1938, the airlines became an 
important customer of the nation's air- 
craft manufacturers. For the student of 
military aircraft procurement problems, 
the question of airline sales is significant. 
Not only did airline sales contribute to 
maintaining a high gross for the aircraft 
manufacturers and hence foster a healthy 
industry, airline purchases of big multi- 
engine transports also stimulated produc- 
tion of a character involving technical 
problems closely akin to, if not precisely 
the same as, those encountered in the 
production of military aircraft. 

Certain critical factors fostering the 
growth of the air carrier industry stand 
out. They can be readily identified, and 
even if one cannot assess their relative 
value in promoting airline growth, mere 



18 CAA, Statistical Handbook 1948, pp. 61-83. 

19 Great Britain Air Ministry, Department of Di- 
rector-General of Civil Aviation, The Civil Avia- 
tion Statistical and Technical Review, 1938 (London, 
His Majesty's Stationery Office, 1939), Table IV, com- 
pares British, French, Russian, German, and U.S. 
airlines. 

29 CAA, Statistical Handbook 1948, pp. 61-83. 



recognition provides a useful impression 
concerning some of the types of variables 
determining the sale of aircraft to airline 
operators and thus contingently affecting 
the production of military aircraft. 

The Air Mail Act of 1925, often called 
the Kelly Act after its congressional spon- 
sor, opened the door to private contract 
mail carriers that replaced the govern- 
ment-operated carrier system in use since 
1918. Designed as a virtual subsidy to 
stimulate the development of airlines, 
the Kelly Act along with its subsequent 
amendments achieved its objective, and 
by 1927 contract carriers handled all air- 
mail. It was, however, in the administra- 
tion of the act that the aircraft industry 
felt its full impact. Since the Post Office 
Department established rigid require- 
ments of financial responsibility in let- 
ting airmail contracts, only contract op- 
erators with the greater capital resources 
continued to bid. 21 Thus, while the Kelly 
Act may be said to have marked the in- 
ception of a substantial system of sched- 
uled carriers, from its very passage the 
administration of the act tended to en- 
courage the few, well-financed operators 
rather than the many, struggling, small- 
scale operators lacking financial support. 
To the aircraft manufacturers both the 
act and its administration spelled good 
news. Private contract carriers, seeking 
lower operating costs in order to under- 
bid, would demand from the industry 
aircraft of increasingly higher perform- 



21 Henry Ladd Smith, Airways: The History of 
Commercial Aviation in the United States (New 
York: A. A. Knopf, 194s), pp. 94ff. This readable 
volume contains a running account of the growth of 
airlines. The author's generalizations and interpre- 
tations, although often unsupported by the evidence, 
are both interesting and provocative. 




U.S. Mail Plane Loading From Mail Truck, September 1922. 



ance, whereas earlier the Post Office had 
operated its own depot for rebuilding and 
repair, keeping the few available aircraft 
in operation as long as possible, having 
little incentive to replace equipment fre- 
quently. 22 Moreover, the stipulation of 
financial reliability imposed by the Post 
Office increased the probability of airline 
credit arrangements satisfactory enough 
for aircraft manufacturers to risk exten- 
sive production outlays on transport air- 
planes for airline operators. 

A second landmark appeared in 1926 
with the passage of the Air Commerce 
Act. Encouraged by the precedent of 
federal aid to seaboard navigation, airline 
operators and aviation enthusiasts per- 

22 F. A. Spencer, Air Mail Payment arid the Gov- 
ernment (Washington, Brookings Institution, 1941), 
p. 25. 



suaded Congress to assume a similar bur- 
den for aerial navigation in the form of 
radio stations, emergency landing fields, 
and beacons under Department of Com- 
merce sponsorship. Freed from the obli- 
gation of facing the heavy capital charges 
involved in these necessities, the air car- 
riers could devote more capital to aircraft 
development. 

The regulatory agency established by 
the Air Commerce Act of 1926 was the 
Bureau of Air Commerce, a unit within 
the Department of Commerce. Legisla- 
tion in June 1938 transferred the func- 
tions of this bureau to an independent 
executive agency, the Civil Aeronautics 
Board (CAB) although its administrative 
organization, the Civil Aeronautics Au- 
thority (CAA), remained in the Depart- 
ment of Commerce. At the same time, 



14 



BUYING AIRCRAFT 



Congress substantially enlarged the scope 
of the agency's powers. Whatever its 
form or title, the appearance of a federal 
agency to regulate air traffic had a pro- 
found impact on commercial aviation. 

Broadly speaking, the Air Commerce 
Act of 1926 was a piece of organic legis- 
lation, collecting the fundamental laws 
of air carrier operations into a single 
comprehensive system. 23 While its pro- 
visions for aids to navigation gave the air 
carriers immediate and substantial finan- 
cial relief, the act's other sections involv- 
ing uniform traffic and air safety regula- 
tions as well as licensing, registration, and 
inspection requirements, also contrib- 
uted toward the establishment of a sta- 
ble, healthy, and vigorous airline indus- 
try in the United States. 

The tendency toward consolidation re- 
ceived substantial encouragement in 1930 
when the McNary-Watres Act amended 
the Kelly Act in such a way as to give even 
greater discretionary powers to the Post- 
master General in awarding mail con- 
tracts. Since the incumbent Postmaster 
General favored a system of integrated 
airlines, many small lines combined into 
networks until a handful of powerful op- 
erators dominated the field. 24 By 1934 
three airlines flew 65 percent of the na- 
tion's route miles, carried 90 percent of 
the mail, and received 88 percent of the 
federal mail subsidy. 28 



23 Air Commerce Act (44 Stat 568), May 20, 1926. 
For evidence of federal aids to navigation, see Air 
Commerce Bulletin (April 15, 1935), statistical tabu- 
lations on airways. 

24 For a general discussion of airline mergers, see 
Smith, Airways, ch. 11, especially p. 243. 

25 Ernest Gugelman, The American Aviation In- 
dustry (New York: D. D. Magruder, Inc. [1934]), p- 
15. Between 1928 and 1934 the number of domestic 
airline operators dropped from 34 to 24. By 1938 



A third landmark in the history of the 
nation's airlines was the precipitous rise 
in passenger traffic that coincided with 
the era of consolidations. Between 1928 
and 1934 airline operations moved off on 
a new tangent as passenger traffic began 
to replace mail as a major source of rev- 
enue. 26 Passenger volume increased from 
less than 50,000 in 1928 to almost 500,000 
in 1934, climbing steadily thereafter. 27 
A number of factors probably contrib- 
uted to this new trend. A steadily im- 
proving safety record may have helped to 
win the public to air travel. 28 A some- 
what more measurable contributory fac- 
tor was the sharp decline in fares. From 
12 cents a mile in 1929, the average pas- 
senger fare tumbled to 5.7 cents a mile 
in 1935. Just how far the air travel fare 
had to fall in order to challenge the rail- 
roads competitively is indicated in the 
1929 air rate, which was three and one- 
half times higher than the average rail 
fare per mile in that year. 28 Yet another 
element apparently contributing toward 
the rise of passenger traffic on the airlines 
was a provision of the McNary-Watres 
Act of 1930 changing the method of com- 
puting mail payments. The pound-per- 
mile formula gave place to a new com- 
putation based on the amount of space 
available. This made it advantageous for 



the number had been reduced to 16. CAA, Statisti- 
cal Handbook 1948, p. 61. 

26 J. A. Frederick, Commercial Air Transportation 
(Chicago, 1945), p. 375, Figure 42, Passenger rev- 
enue exceeded mail revenue for the first time in 1935. 

27 CAA, Statistical Handbook 1948, p. 70. 

28 Ibid., p. 93. Passenger fatalities dropped from 
28.8 per 100 million passenger-miles to 4.7 between 
1930 and 1935. See also, M. J. Meehan, "Progress in 
the Aeronautical Industry," Survey of Current Busi- 
ness (March 1936), pp. 16-18. 

29 Aviation Industry in the U.S., p. 41. 



AIRCRAFT INDUSTRY ON THE EVE OF WORLD WAR II 



15 



operators to acquire new and larger air- 
craft, which, when not filled with mail, 
invited passenger traffic. 30 Such types as 
the Ford Trimotor, the Curtiss Condor, 
and the Douglas DC-2, appearing in suc- 
cession, did much to popularize air travel. 

The appearance of passenger revenue 
as a major element in the air carrier busi- 
ness marked a definite turning point in 
the history of air transport. It came just 
in time to cushion the airlines when the 
federal government abruptly canceled all 
private airmail contracts in February 
1934- 

The airmail scandals of 1934 with their 
involved interplay of political and eco- 
nomic competition cannot be recounted 
here at length, but it will be useful to 
take note of the episode since it shed 
light upon the peculiar antagonisms be- 
hind the record of military aircraft pro- 
curement discussed in a subsequent chap- 
ter. In February 1934 the President 
issued an Executive order canceling all 
airmail contracts and transferring opera- 
tions to the Army. 

When Army airmen attempted to fly 
the mails on short notice, lacking ade- 
quate equipment and training for the 
task, they were beset with disaster. After 
a week of midwinter flying and almost 
daily crashes, the score of catastrophes 
stood at five pilots dead and six seriously 
injured. Soon afterward the President 
rescinded his ban and began negotiations 
to return the mails to the private air car- 
riers. It was against this setting that Con- 
gress passed the Air Mail Act of 1934, 
which abandoned the subsidy character of 
previous airmail legislation and reverted 
to rigid emphasis on low bids regardless 



30 McNary-Watres Act, April 29, 1930, sec. IV. 



of responsibility, reliability, or pioneer- 
ing investments, all considerations fa- 
vored in previous awards. As one writer 
subsequently declared, the 1934 airmail 
legislation as finally passed had a "puni- 
tive aroma." 31 

The airmail carriers must have felt that 
the 1934 legislation really was "punitive" 
since their airmail subsidy fell from 23 
million dollars in 1933 to 12.5 milions in 
1935. Nevertheless, the airlines did not 
collapse. The volume of mail carried by 
air mounted rapidly throughout the thir- 
ties and by 1939, even under the less fa- 
vorable legislation of 1934, mail revenues 
to the air carriers exceeded the sums re- 
ceived before the subsidy legislation had 
been annulled. 32 More important, how- 
ever, was the rising volume of passenger 
traffic, which had turned upward before 
the 1934 legislation was enacted and 
which was further stimulated thereby. 
Had the subsidy cut come earlier, for ex- 
ample in 1928, it might well have been 
fatal, but in 1934 mail revenues no longer 
constituted the predominant percentage 
of air carrier income. By 1938, passen- 
ger revenue constituted 57.6 percent of 
the carriers' income, and the potential 
market had scarcely been tapped since 
airline passenger-miles amounted to but 
6.8 percent of Pullman passenger-miles. 33 



31 Hugh Knowlton, Air Transportation in the 
United States (Chicago, University of Chicago Press, 
1941), p. 10. 

52 CAA, Statistical Handbook 1948, p. 80. 

33 CAA, Statistical Handbook 1945, p. 33, and 
CAA, Statistical Handbook 1948, p. ^g. The charac- 
ter of the potential passenger volume for air carriers 
in 1938 is suggested by the fact that ten years later 
the airlines were carrying 48.5 percent as much traf- 
fic as Pullmans. In 1938 it was estimated that less 
than one-half of one percent of the population flew 
each year. Air Commerce Bulletin (October 15, 
1938), p. 98. 



16 



BUYING AIRCRAFT 



The transition of the airlines to a pri- 
mary interest in passenger traffic had a 
clearly discernible effect upon aircraft 
manufacturing in the United States. 
Many carriers bid on mail contracts at a 
loss rather than lose their routes, hoping 
to combine mail and passenger volume 
for a profit. Faced with almost certain 
loss unless costs could be pared, operators 
were more than ever anxious to procure 
aircraft with improved performance. 
Engines that could be operated 200 hours 
rather than 100 hours between overhauls 
meant increased services at lowered costs 
and a possible profit. In the same fashion, 
the transition to passenger traffic fostered 
a still greater interest in high perform- 
ance aircraft since airlines studies re- 
vealed that improved equipment had a 
marked influence on passenger volume. 84 
Speed in particular had sales appeal. Be- 
tween 1934 and 1938, the average air 
speed of the airliners advanced from 127 
to 1 63 miles per hour as one carrier after 
another secured new equipment with 
which to hold or capture passenger 
traffic. 35 

From two directions, then, cost cut- 
ting and passenger transport, the carriers 
were induced to procure new equipment, 
and four out of five of the biggest opera- 
tors sold stock in the mid-thirties to raise 
the necessary funds. 36 That this meant 
life-giving business for the aircraft manu- 
facturers is clear from the fact that the 
five largest carriers at that time main- 
tained fleets ranging from fifteen to 
nearly sixty units. 37 Replacement of any 



34 Aviation Industry in the U.S., p. 55. 

35 CAA, Statistical Handbook 1945, p. 31. 

36 Barron's (February 22, 1937), p. 9. 

37 Aviation (April 1937), p. 77. 



substantial portion of these fleets opened 
the possibility of true production line 
output of multiengine aircraft for the 
first time. 

The shift to passenger traffic and the 
declining mail subsidy might in them- 
selves have effected something of a boom 
in aircraft manufacture, but by a pecu- 
liar coincidence a technical revolution 
appeared on the very eve of the airmail 
fiasco. The last transcontinental airmail 
run before the private contracts were 
canceled was flown in a Douglas DC-2 on 
her maiden record-breaking trip across 
the nation in thirteen hours and four 
minutes. With successful completion of 
the record transcontinental flight, the 
14-passenger 200-miles-per-hour Douglas 
airliner rendered obsolete virtually every 
other airliner in the country. The tech- 
nical revolution, as embodied in the 
DC-2, like most revolutions, did not 
come from any single drastic step forward 
in design but rather from the cumulative 
effect of several significant innovations. 
By coincidence, the development of 
monocoque, all-metal structures replac- 
ing the wood, wire, and fabric structures 
of the previous decade appeared just 
when a series of major innovations in de- 
sign provided power plants with vastly 
more output per pound of engine. The 
appearance of the DC-2 incorporating 
all these advances in a brilliant new syn- 
thesis forced one carrier after another to 
discard existing equipment, often long 
before its actual usefulness had gone, in 
favor of the new and markedly superior 
Douglas airplane. There followed a prof- 
itless prosperity for the carriers, who were 
forced to pour the earnings of their grow- 
ing passenger traffic back into new equip- 
ment. The cost of replacement mounted 



AIRCRAFT INDUSTRY ON THE EVE OF WORLD WAR II 



17 



sharply, rising from approximately $30,- 
000 per unit before the technical revolu- 
tion to something in the neighborhood 
of $60,000 after the appearance of the 
DC-2. 38 The process of replacing equip- 
ment was so expensive the airlines con- 
tinued to show deficits until 1939 despite 
substantial increases in revenue. 30 

Perhaps the clearest index to the im- 
pact of the technical revolution on the 
airlines is to be found in the size of the 
total air fleet maintained by the carriers. 
From a peak of 497 units in 1930, the 
number fell to 260 in 1938; there were 
actually fewer units licensed in 1938 than 
in 1928 despite the enormous increases 
in passengers, mail, and express carried 
by the airlines. Not only did the precipi- 
tous renewal of almost the entire carrier 
fleet result in a growing emphasis on pro- 
duction but it also brought to a head all 
the contingent problems of the technical 
revolution in aircraft manufacturing. 
Larger, more expensive, and technically 
novel aircraft required enlarged facilities, 
new financing, and extensive tool re- 
placement, all within a very short period 
of time. 

In sum, then, down to fiscal year 1938 
there were three outstanding factors con- 
ditioning the airline market for aircraft: 
the Air Mail Act of 1925, the Air Com- 
merce Act of 1926, and the shift from mail 
to passenger traffic as a primary source of 
revenue. Each in some measure encour- 
aged the growth of air carriers as custom- 
ers for aircraft and in varying degree 
strengthened the aircraft industry as an 



38 Aviation Industry in the U.S., p. 80. Barron's 
(February 22, 1937) gives a somewhat higher figure, 
running from a pre- 1934 cost of approximately 
$85,000 to a post- 1934 figure around 1 120,000. 

30 Barron's (January 15, 1940), p. 25. 



element of national defense. The carrier 
market was, however, only one aspect of 
the three major market areas, domestic, 
export, and military, that occupied the 
industry in the late thirties. 

The Export Market 

In terms of sheer numbers of units, 
sales of aircraft abroad were by no means 
inconsiderable. From a mere 37 ex- 
ported in 1922, the year of doldrums fol- 
lowing World War I, exports mounted, 
erratically and with annual fluctuations, 
to a total of 631 units in 1937. Aircraft 
engine exports climbed from 147 in the 
rock-bottom year 1922 to 1,048 in 1937. 
Foreign sales in spare parts, replacements, 
and accessories tell a similar story, grow- 
ing from $250,000 in 1922 to something 
over $12,000,000 in 1937. Taken to- 
gether, aircraft, engines, parts, and acces- 
sories in the export trade represented a 
sizable volume of business for the na- 
tion's aircraft industry, in all, over $39,- 
000,000 in 1937. 40 

As an important attribute to national 
defense, aviation was subsidized in one 
form or another by all the major powers. 
For this reason, none of the great na- 
tions offered much in the way of markets 
for aircraft exported from the United 
States, at least not in normal times of 
peace. The bulk of the peacetime ex- 
port market went to lesser states. Almost 
any year chosen at random demonstrates 
this distribution. In 1929, for example, 

40 Aviation Industry in the US., p. go, based on 
data compiled from The Aeronautical Chamber o£ 
Commerce of America, Inc., and the Bureau of Air 
Commerce sources. After World War II the name of 
the chamber was changed to Aircraft Industries As- 
sociation. See also, CAA, Statistical Handbook 1945, 
p. 123. 



18 



BUYING AIRCRAFT 



only 1 2 aircraft were exported to Europe, 
but Latin America took ig6. In 1936, 
when 61 units went to Europe, 192 went 
to Latin America. 41 Moreover, since the 
majority of aircraft were exported to the 
lesser states and smaller powers, the total 
number of units in any one contract was 
almost necessarily small and credit ar- 
rangements were frequently involved, if 
not actually precarious. 42 

Regulations conceived to protect the 
national interest by restricting the export 
of military secrets constituted a second 
determinant in the aircraft export trade. 
These regulations, applying to military 
aircraft only, required a two-year time lag 
in the release of current aircraft designs 
to foreign states. After the passage of the 
neutrality legislation of the mid-thirties, 
the export license requirements provided 
an even greater measure of control than 
had existed theretofore. In favor of these 
security restrictions, it was argued that 
the nation's technical secrets and margin 
of design superiority were safeguarded. 
Critics, especially aircraft manufacturers 
who suffered from the curb, raised a num- 
ber of points in opposition to the security 
measure. 43 Restrictions on exports, espe- 
cially those on export of military aircraft 
already on contract, reduced the number 
of units of any one design that could be 
produced in a single production run. 



41 Aviation, March 1930, p. 596, and April 1937, 
pp. 84-85. 

42 For some revealing insights on the subject of 
aircraft export sales, see Special Com Investigating 
the Munitions Industry, U.S. Senate, Hearings (pop- 
ularly called Nye Hearings), pt. Ill, 73d Cong, Feb- 
ruary i\, 1936, and pt. IV, 73d Cong, Exhibit 301, 
P- 894- 

43 For an instance of a manufacturer's protest 
against curbs on exports, see D. L. Brown, "Export 
Volume and Its Relation to Aviation Progress and 
Security," Aerodigest (December 1934), pp. 15ft. 



Perhaps the most important of all the ar- 
guments against export curbs on military 
aircraft was the contention that mere ex- 
port curbs would not prevent foreign 
states from securing the most recent mili- 
tary aircraft design details and incorpo- 
rating them in their own aircraft designs 
at will. Since the development of facili- 
ties and productive capacity was, in the 
long run, probably as vital to the nation's 
security as any particular design detail, 
the export curb to all intents and pur- 
poses encouraged or reinforced the crea- 
tion of productive capacity in foreign 
states. Finally, there can be little doubt 
but that restrictions on the export of most 
recent military designs placed manufac- 
turers in an unfavorable competitive po- 
sition when pitted against other export- 
ing nations. 44 

Military officials, confronted with fre- 
quent proddings from manufacturers, 
attempted to liberalize the export re- 
strictions as far as possible in order to 
encourage a healthy aircraft industry. 
Nonetheless, they continued to insist on 
the principle of a time lag before releas- 
ing current production models for the 
export market. 45 

A less tangible but no less influential 
determinant of aircraft exports is to be 
found in the political and diplomatic 
sphere. This type of influence on exports 
may be illustrated best by the case of the 



44 Competition in the export market between the 
two wars was sharp. British exports topped those of 
the United States down to the early thirties, and 
pressed close behind thereafter. See Air Ministry, 
Dept of Civil Aviation, Civil Aviation Statistical and 
Technical Review 1938; Aviation (October 1938), 
p. 35; Automotive Industries (March 1939), pp. 57-j— 
75- 



1 See 



ch. IX 



export ban. 



below, for a fuller discussion of the 



AIRCRAFT INDUSTRY ON THE EVE OF WORLD WAR II 



19 



neutrality legislation of the middle thir- 
ties. From the aircraft manufacturer's 
point of view, considerations such as 
those raised by the discretionary powers 
given the President in the neutrality leg- 
islation for invoking the ban presented 
imponderables against which it was vir- 
tually impossible to plan. The character 
of this difficulty becomes evident when it 
is observed that China was the most im- 
portant single buyer of aircraft exports 
from the United States. In the period 
from 1925 through 1934 the Chinese pur- 
chased 6,986 aircraft, while between 1935 
and 1938 the number reached 12,406. In 
both periods the Chinese accounted for 
something over 13 percent of the nation's 
total export volume. 46 Had the President 
found it politically and diplomatically ex- 
pedient to elevate the China Incident to 
the rank of a war, by the terms of the 
neutrality legislation much of this impor- 
tant export trade would have dried up. 
Thus, the aircraft manufacturer's export 
trade no less than his sales to domestic air 
carriers was ultimately and most vitally 
subject to political decisions often far be- 
yond the scope of any individual manu- 
facturer's ability to influence or even to 
predict. 

In the face of all the imponderables 
and complexities confronting aircraft 
manufacturers who pursued the export 
market, one might well be inclined to ask 
why they continued to show such aggres- 
sive interest in the field. A cursory analy- 
sis of aircraft exports in almost any year 



4& Elsbeth Estelle Freudenthal, The Aviation Busi- 
ness: From Kitty Hawk to Wall Street (New York: 
Vanguard Press [1940]), Table IX, p. 141, and Table 
XIX, p. 271; Harding, Aviation Industry, p. 3; Bu- 
reau of the Census, Statistical Abstract of the U.S. 
*9tf> P- 458- 



may reveal the answer. With the crash of 
1929 and 1930, the total value of aircraft 
production fell from $91,000,000 to ap- 
proximately $61,000,000. In this same 
period, however, exports fell off only 
about $250,000, providing between eight 
and nine million dollars' worth of busi- 
ness to the industry. 47 Expressed in terms 
of payrolls and employment, the impor- 
tance of this volume of business in the 
depression is easily recognized. In 1937 
exports amounted to approximately one- 
third of the nation's total aircraft produc- 
tion, but this third accounted for an esti- 
mated 50 percent of the industry's net 
profits. 48 Unhampered by statutory profit 
limitations in pricing, export items re- 
turned a larger profit than could be ex- 
tracted in the domestic trade. 

While the above illustrations refer to 
aircraft exports, virtually the same con- 
clusions could be drawn with regard to 
engines, spare parts, and accessories. In 
fact, engine exports outstripped aircraft 
sales annually by almost two to one. Dur- 
ing the two worst years of the depression, 
1932 and 1933, when aircraft sales ranged 
between 300 and 400 units, engine sales 
totaled 2,356 and 2, 901. 49 

In short, despite serious obstacles, the 
export business was extremely worth- 
while to aircraft manufacturers in the 
United States. It might even be argued 
that the export business was essential to 
the health of the nation's aircraft indus- 
try. By raising the volume of output it 



47 L. W. Rogers, "Analysis of Aviation Exports," 
Aerodigest (April 1931), p. 45; CAA, Statistical Hand- 
book 1948, pp. 43, 58. 

48 Aerodigest (July 1938), p. 34; Aviation (April 
■93®)- P- 3 1 ! Denis Mulligan, Aircraft Manufacture 
in Chicago {Chicago, 1939), p. 8. 

49 Air Commerce Bulletin (15 May 1938), p. 280. 



20 



BUYING AIRCRAFT 



increased the probability of mass produc- 
tion and strengthened the nation's posi- 
tion of readiness for war. But even at 
their best, the domestic carrier and ex- 
port markets were less important to the 
cause of national defense than the mar- 
ket for military aircraft in the United 
States. 

The Domestic Military Market 

A simple statistical presentation of the 
total military and commercial aircraft 
market, both as to numbers and value, 
should provide a useful point of depar- 
ture in an analysis of military sales. 
\ Table 2] These figures reveal a good 
deal about the market for military air- 
craft in the United States. The dollar 
value of military sales exceeded that of 
civil sales by a considerable margin des- 
pite the lower total number of military 
units sold. On the basis of continuity 
and high dollar volume, the military 
market would appear to have offered an 
attractive field for aircraft manufactur- 
ers. Further detailed study, however, 
confutes the impression. 

Aircraft average unit costs were rising 
sharply throughout the period of the 
technical revolution: 50 





Military 


Civil 


Military 


Civil 


Year 


Aircraft 


Aircraft 


Engines 


Engines 


1928... 


. , f 15-64' 


$4,854 


54,736 


$1,551 


•932 . .. 


.. . 17.519 


4.259 


5.872 


3.565 


1937. .. 


• • . 39- o6 3 


8413 


7456 


3.734 



The average unit cost of military aircraft 
was far in excess of the civil aircraft aver- 
age unit cost. Several factors contributed. 
The air arm was building an increasingly 



Aviation Industry in the U.S., p. 71. 



larger percentage of bombers, which 
tended to drive up the average. Where 
there had been but one bomber to every 
four pursuit planes in 1926, by 1937 there 
were eleven bombers to nine pursuits, and 
the bombers were in many cases four- 
engine rather than two-engine craft. The 
complexity introduced with the technical 
revolution sent engineering costs alone 
up some 48 percent in the transition from 
wood to tubular metal structures; with 
the coming of monocoque structures, en- 
gineering costs mounted another 50 per- 
cent. Many of the heavy charges encoun- 
tered in military aircraft were not found 
in most of the civilian types. The early 
B-17, for example, contained more than 
$10,000 worth of instruments, not to 
mention armament and other special 
military accessories. 51 

The higher average unit cost of mili- 
tary aircraft stemmed not alone from 
sheer size or complexity; rather it was 
more directly the result of military em- 
phasis on high performance. Inasmuch 
as engine horsepower is an important fac- 
tor in high performance, a comparison 
will explain the relationship between the 
higher costs of military aircraft and per- 
formance requirements. In 1937 civil 
aircraft engine production amounted to 
2,289 units, but 1,393 °f these fell in the 
under 50 horsepower category and all the 
rest save 88 were below 600 horsepower. 52 
Military aircraft, on the other hand, used 
no engines in the 50 horsepower category 
and from a total of nearly 1,800 engines 
produced for military use, 1,276 were in 



51 Testimony from Hearings before the Subcom of 
the Com on Appropriations, House, 75th Cong, 1st 
sess, 1938 Military Establishment Appropriations 
Bill, March 1937, pp. 520-22. 

52 CAA, Statistical Handbook 1948, p. 51. 



AIRCRAFT INDUSTRY ON THE EVE OF WORLD WAR II 21 
Table 2— Comparative Importance of Military and Civilian Markets 



Year 



Military Units 
Sold 



Value in 
Thousands 



Civilian Units 
Sold 



Value in 
Thousands 



1926 
1928 
1930 
1932 
1934 
1936 



552 
1,219 
747 
593 
437 
1, 141 



$6, 154 
19, 066 
10,723 
10, 389 
8,837 
27,836 



604 
3,582 
1,937 
549 
772 
1,559 



22,716 
17, 194 
10, 746 

2,338 
9,958 
12,380 



Source: Figures for first three years are from Automotive Industries (February 23, 1935), page 295. Figures for last three years are from 
Aviation Industry in the United States, page 70, based on Aeronautical Chamber of Commerce sources. 



categories above 700 horsepower. 53 Thus, 
aircraft manufacturers who wished to 
compete for the military market were 
forced to operate with an ever larger capi- 
tal structure to carry the charges involved 
in the exceedingly high average unit cost 
for military aircraft and engines. In ad- 
dition, the necessity of turning out air- 
craft of progressively superior perform- 
ance to meet the tactically competitive 
requirements of the military market in- 
volved the annual investment of large 
sums for research and development in 
contrast to the civil aircraft market, 
where a single basic design occasionally 
continued to amortize initial develop- 
ment costs over a period of several years. 

As a result of the characteristics de- 
scribed above, the market for military 
aircraft tended, to remain in the hands of 
a comparatively few manufacturers. In 
1937, for example, all Army aircraft pro- 
curement was with 10 manufacturers, all 
Navy with 8. And this was from a field of 
98 aircraft manufacturers of whom 48 
were in active production. In the case of 
engines, the concentration of business in 
the hands of a few was even greater. From 

53 Automotive Industries (February 26, 1938), pp. 
a6aff. 



a total of 23 aircraft engine manufactur- 
ers in 1937, the Army's entire procure- 
ment came from 3 concerns and the 
Navy's came from 2. S4 Expressed in 
somewhat different terms, the concentra- 
tion of the military market can be seen 
in the fact that less than a dozen firms 
manufactured all but 200-odd of the 4,977 
aircraft produced for the Army and the 
Navy between 1931 and 1937. 55 From 
1931 through 1937 seven of the largest 
manufacturers could account for the fol- 
lowing percentages of their business 
through government contracts: 56 



5 * Air Commerce Bulletin {15 May 1938), p. 280; 
Aviation in the U.S.,pp. 100-101. 

55 Aviation Industry in the U.S., app. VI. Based 
on Aeronautical Chamber of Commerce figures. 
Four firms produced three-quarters of this total for 
the period: Douglas produced 1,194 aircraft for the 
Army and the Navy between 1931 and 1937, Boeing 
684, Curtiss-Wright 681, and North American 551. 

56 Freudenthal, Aviation Business, Table VI, p. 
128, hased on Com on Naval Affairs, House, Hearings 
on Investigation Into Certain Phases of the Manu- 
facture of Aircraft and Aeronautical Accessories . . . , 
February 2-March 8, 1934 (hereafter cited as Delaney 
Hearings), and Subcom on Aeronautics of the Com 
on Naval Affairs, House, Rpt on Investigation Into 
Certain Phases . . . , April 10, 1934 (hereafter cited 
as Delaney Report), items 18 and 37, respectively, in 
Sundry Legislation Affecting the Naval Establish- 
ment: 1933-1934, 1st and ad sess, 73d Cong (here- 
after cited as Sundry Naval Legislation, 1933-34). 



22 



BUYING AIRCRAFT 



Percent of 

Manufacturer Total Sales 

Boeing 59 

Chance Vought 75 

Consolidated 79 

Curtiss 76 

Douglas 91 

Martin 100 

Grumman 75 

From these observations a few general 
conclusions may be drawn regarding the 
military aircraft market. In dollars, it 
was the predominant aircraft market, 
though prbfits in the field were subject to 
statutory limits in some cases. In addi- 
tion, the insistent requirement for ever 
better performance in military aircraft 
made the military market probably the 
most difficult to enter in the technological 
sense. The need for continuing research 
and development along with the growing 
complexity and size of military aircraft 
made of the military market a costly busi- 
ness, a veritable bottomless pit for funds. 
And all this, of course, was expense in- 
curred in addition to the investments that 
all aircraft manufacturers, whether seek- 
ing the military market or not, had to 
face in securing the new facilities and the 
new tools required by the technical revo- 
lution in aircraft structures. As a conse- 
quence, the seemingly attractive military 
market was confined more or less to a 
dozen manufacturers specializing in mili- 
tary types, and even within this group, 
four firms received the bulk of the busi- 
ness, largely because they were capable of 
pursuing a thoroughly aggressive policy 
of research and development. 

Research and Development 

In the aircraft industry, the injunction 
"design or die" has always been virtually 
axiomatic. Superior performance ex- 



pressed in higher speeds, greater ceilings, 
heavier loads, and longer ranges wins 
contracts. To stay in business, manufac- 
turers soon learned that they must main- 
tain engineering staffs capable of exploit- 
ing the latest findings of aeronautical 
science, translating theory into practical 
designs. Where there had been but 30 
aircraft design groups in the industry of 
1918, by 1939 there were 125 different 
research and development staffs special- 
izing in aircraft, engine, and accessory 
design work- 57 

The competitive pressure for improved 
performance made flux in design well- 
nigh continuous, research and develop- 
ment an unending process. The phrase 
research and development is glibly re- 
peated in discussions of military appeals 
for higher appropriations, but one seldom 
finds it concisely defined. In the aero- 
nautical field, as elsewhere, research is of 
two kinds, fundamental and applied; the 
former is the peculiar province of the 
scientist, the latter the task of engineers. 
Where one deals in abstract theory, the 
other must make practical application. 
Thus research and development has come 
to be a shorthand expression for the whole 
spectrum from the most theoretical explo- 
ration of fundamental theory down to the 
most practical attempts to solve design 
problems in particular instances. 

In aviation, as with other scientific 
fields, the quest for underlying scientific 
principles has been carried on extensively 
in the universities. During the first two 
decades of flying, few universities offered 
courses specializing in the aeronautical 
sciences, but after 1936 the Guggenheim 



57 AAF Hist Study 50, Materiel Research and De- 
velopment in the Army Air Arm: 1914-1945, p. 78. 



AIRCRAFT INDUSTRY ON THE EVE OF WORLD WAR II 



23 



Fund greatly strengthened fundamental 
research in the aeronautical sciences with 
large endowments to nine universities 
strategically dispersed over the nation. 58 
Yet, despite the presence of excellent fa- 
cilities in several universities, in ig39 
only one-seventh of one percent of the 
Air Corps' research budget, or approxi- 
mately $15,000, went directly to univer- 
sity research contracts. While indirect 
contracts and industrial utilization of 
university facilities increased this figure 
somewhat, the universities did not match 
the volume of activities in fundamental 
research carried on by the federal govern- 
ment. 59 

Among the federal agencies concerned 
with aeronautical matters, one, the Na- 
tional Advisory Committee for Aeronau- 
tics (NACA), stood pre-eminent in the 
field of fundamental research. This ex- 
ecutive agency, established by Congress 
in 1915 to supervise and direct the scien- 
tific study of flight, had grown by 1938 
into the nation's leading center of funda- 
mental research. The initial appropria- 
tion of $5,000 in 1915 increased during 
the between-war years until it annually 
totaled nearly $2,000,000. Following the 
curve of appropriations, NACA grew 
from a small group of scientists to a tech- 
nical staff of more than 500 people ad- 
ministering and operating an elaborate 
installation of research facilities located 
at Langley Field, Virginia. This research 
plant included laboratories for engine 
and instrument tests, machine shops, a 
flying field, and wind tunnels. All to- 
gether, the NACA boasted 1 1 wind tun- 
nels, among which were a 60 by 30 foot 

58 Final Report of the Daniel Guggenheim Fund 
for the Promotion of Aeronautics, 1930. 
50 AAF Hist Study 50, pp. 6a, 83-85. 



full-scale tunnel, an eight-foot, 500-miles- 
per-hour tunnel, and other equipment 
such as vertical and refrigerated tunnels 
for specialized types of aerodynamic re- 
search. 60 

Although in many respects inferior to 
the research facilities available to Euro- 
pean powers, the equipment for funda- 
mental research in the United States, both 
federally and university sponsored, repre- 
sented a marked increase over the inade- 
quate equipment of 1918. Over the 
twenty-year period between the wars, the 
nation acquired perhaps a dozen centers 
of advanced aeronautical research, of 
which the NACA facilities were the best. 
These research centers w r ere significant 
assets, not only for scientific achievement 
but also as training schools for the vitally 
necessary aeronautical engineers of indus- 
try. Science may calculate the ultimate 
level of aircraft performance, but it is 
applied research and development car- 
ried on by the industry's engineering and 
design staffs that regulate the actual pace 
of technical progress. 

Army policy on aeronautical research 
went through several phases in the 
between-war years. From the armistice 
until 1926 there was a certain amount of 
wavering between a policy of support for 
both fundamental and applied research 
and a policy of concentrating expendi- 
tures in applied research. From 1926 un- 
til 1938 it was Army policy to follow the 
latter course almost exclusively. 61 The 

ft0 Ibid., p. 65. 

61 For a lengthy discussion of the vicissitudes of 
air arm research and development policies, see 
Rotary-Wing Aircraft in the Army Air Forces: A 
Study in Research and Development Policies, 1946, 
by Irving B. Holley, jr., filed in Wright Field His- 
torical Office (WFHO); and AAF Historical Study 
50, page 75. 



24 BUYING AIRCRAFT 




National Advisory Committee for Aeronautics Annual Meeting, October 1939. 



preoccupation with applied research was 
particularly evident on the eve of the war 
when some 60 percent of the available 
research funds actually went to industry 
in contracts for experimental and service 
test items. 62 Thus, although the sums 
specifically earmarked by the air arm for 
research were relatively small, the ma- 
teriel development contracts awarded to 
industry represented a hidden subsidy of 
significant proportions. 63 But this form 
of research subsidy was not without draw- 
backs. 



83 AAF Hist Study 50, p. 75. 



During the years from 1926 to 1938 the 
practice among virtually all manufactur- 
ers seeking Army contracts for experi- 
mental air materiel was to bid as low as 
possible, even accepting a loss, on experi- 



63 Ibid., p. 4g. The following tabulation shows 
the breakdown for R&D funds for 1937-39: 





1937 


1938 


1939 


Total R&D funds. . 


$4,518,460 


(4, 349, 890 


$3, 574, 290 


R&D 


2,468,900 


2,928,135 


2,043.409 




1,657,060 


1,104,950 


1,201,550 


Service test items . . 


392,500 


316,805 


329,331 



AIRCRAFT INDUSTRY ON THE EVE OF WORLD WAR II 



25 




ifjgssss 




NACA Full-Scale Wind Tunnel at Langley Field, 1930's 



mental work in the hope of recouping 
later with high-volume production con- 
tracts. As long as this practice prevailed, 
manufacturers had little incentive to ex- 
ecute any form of experimental work 
other than that promising some more or 
less immediate return in a subsequent 
production contract to amortize costs. 
Under the pressure of this economic re- 
straint, manufacturers were unwilling to 
indulge in extensive fundamental re- 
search. Then, early in 1939, the Air 
Corps promulgated a new policy that can 
best be called pay-as-you-go research. 
Designed to unshackle the pace of design 



flux from the manufacturers' fears that 
subsequent production contracts might 
not be forthcoming, the pay-as-you-go 
policy developed an unexpected by- 
product. Not only did the policy tend to 
speed the pace of design change but it 
also encouraged individual manufactur- 
ers to move into the field of fundamental 
research, since it was no longer necessary 
to look for immediate results with which 
to amortize costs. This trend toward in- 
dustrial participation in fundamental re- 
search created a host of new and difficult 
administrative relationships between in- 
dustry and the Army that were still un- 



26 



BUYING AIRCRAFT 



resolved when the coming of war greatly 
aggravated the matter. 

The acceleration of design change 
after 1938 presented a problem of critical 
significance to the aircraft industry. 
Mass production required standardiza- 
tion. Rapid flux in design is the very 
antithesis of this. If a manufacturer in- 
troduces major design changes in each 
successive aircraft turned out, efficient 
production in the sense of large-quantity 
fabrication by repetitive machine process 
is patently impossible. Fluid design 
changes and a high rate of production are 
mutually exclusive. 64 

To explore this problem further, it is 
necessary to make a brief survey of the 
evolution of aircraft production patterns 
during the twenties and thirties. 

Production 

The term production, unless narrowly 
defined, can lead to endless trouble in 
any discussion of the aircraft industry. 
In aviation circles it means not mere 
fabrication of items, but mass production, 
or the approach to mass production in 
numbers sufficiently great to justify aban- 
doning the handmade, custom-tailoring 
method of individual unit fabrication in 
favor of techniques commonly associated 
with mass production in almost any in- 
dustry: straight-line assembly, conveyor 
belts, large runs in unit fabrication, and 
the like. 



The aircraft industry conception of the 
term production was quite different from 
that of the automobile and other mass 
production industries. Table 3 reveals 



e4 Co£AC to Chief, Mat Div, 1 Mar 39, and reply, 
10 Mar 39; Memo, CofAC to ASW, undated, WFCF 
1943, 1 Si. 6 Costs, R&D Policy. See also, Air Board 
Rpt, sg Mar 39, and TAG to Chiefs of Arms and 
Services, 15 Sep 39, WFCF 1940, 320.2 Army Aviation. 
See Chapter VIII in Holley's MS monograph, Rotary- 
Wing Aircraft in the Army Air Forces: A Study in 
Research and Development Policies. 



much about the nature of the aircraft in- 
dustry. The automobile makers in 1937 
turned out some 1,500 times more units 
than did the aircraft builders and did the 
job with a labor force only eight times 
larger. To be sure, the automobile is 
less complex than the airplane, but the 
explanation for the difference in produc- 
tion efficiency is indicated in the different 
wage patterns of the two industries. For 
example, in 1937 aircraft workers aver- 
aged a 42.3-hour week at an hourly rate 
of $0,666, while automobile workers 
worked an average of 35.9 hours each 
week but drew pay at an average hourly 
rate of $0.891. 05 This spread may reflect 
labor's more effective organization in the 
automobile industry, but clearly the dif- 
ferential was made possible by high vol- 
ume, which justified a high degree of 
production tooling to cut unit costs. 

As late as 1939, when foreign orders 
were already mounting, one typical air- 
craft manufacturer, and a highly efficient 
one too, turned out only two or three 
units a day in comparison with Detroit's 
production of two or three automobiles 
per minute. Behind this contrast stands 
the machine. Where Chevrolet's invest- 
ment per worker in plant and equipment 
amounted to $2,600, Martin, a leader in 
the aircraft field in 1939, had an invest- 
ment of about $800 per worker. 66 



65 Bureau of the Census, Statistical Abstract of the 
U.S., 1959, p. 329. 

66 Fortune (December 1939), pp. 74-75; and George 
Bryant Woods, The Aircraft Manufacturing Indus- 
try (New York, Boston: White, Weld and Co., 1946), 
p. 4. 



AIRCRAFT INDUSTRY ON THE EVE OF WORLD WAR II 27 
Table 3— A Comparison of the Aircraft Industry With the Automobile Industry 



Yeir 


Number of 
Establishments 


Average Number 
of Wage Earners 


Dollar Value 
of Products" 


Number of Units 
Produced 


Aircraft 


Automobile 


Aircraft 


Automobile 


Aircraft 


Automobile 


Aircraft 


Automobile 


1929 

1933 


132 
64 

92 


210 
121 
131 


14,710 
7,816 
24,003 


224, 688 
97, 869 
194, 527 


71, 153,000 
26, 460, 000 
106,586, 000 


2,391,090,000 
1, 096, 946, 000 
3,096,219,000 


6, 522 
1, 179 
3, 100 


5, 294, 087 
1, 848, 013 
4,732,553 


1937 



For aircraft, value of product includes value of aircraft and parts. For automobiles, value of product denotes value of automobiles only. 



Comparisons of average dollar output 
per employee afford another index to the 
aircraft industry's lack of tooling. In 
1937 aircraft workers at something over 
$4,400 in product value per worker lagged 
far behind automobile workers, averag- 
ing more than $15,000 in product value 
added per worker. 07 

Thus, although the aircraft industry 
turned out an increasing number of units 
in the years following the slump, aircraft 
production was not to be confused with 
production in the automobile industry, 
where the term meant something quite 
different. The following figures indicate 
the relatively inferior rank of aviation in 
the nation's business as a w T hole in ig36: 68 



Total Value 

Product of Product 

Automobiles and trucks $2,448,000,000 

Farm implements 420,000,000 

Cans 375,000,000 

Refrigerators (retail) 328,000,000 

Typewriters and office equipment . . . 153,000,000 

Aircraft parts and engines 86,000,000 



Combining all these factors— low unit 
volume, low gross dollar volume, and 
lack of production tooling— the plight of 
the aircraft industrv in the late nineteen 

67 Computed from Bureau of the Census, Statisti- 
cal Abstract of the U.S., 19)9, p. 803. 

68 Figures for 1936. Harding, Aviation Industry, 
p. 69. 



thirties can be summarized as follows: 
low-priced airplanes waited upon the in- 
troduction of production techniques in 
the industry, but high-volume produc- 
tion could be justified only by a mass 
market, which waited upon low-priced 
airplanes. Until some escape from this 
circle could be found, true mass produc- 
tion in the aircraft industry would re- 
main out of reach. This was the situation 
prevailing when the crisis appeared in 
Europe. 

Genuine mass production did exist in 
one branch of the industry. While air- 
craft manufacturers turned out dozens of 
units, engine manufacturers turned out 
hundreds. Where the major aircraft 
builders often produced several models 
in a year, every one a distinct production 
problem requiring independent tooling, 
two or three engine manufacturers domi- 
nated the field with a restricted number 
of models that they sold for use with nu- 
merous different airframes. By way of 
illustration, as early as 1930, when four 
leading airframe concerns delivered a to- 
tal of only 428 military aircraft, a single 
engine firm produced 666 engines for 
military use. 66 



69 Paul A. Dodd, Financial Policies in the Aviation 
Industry, Ph.D. Thesis, University of Pennsylvania, 
193a (Philadelphia, 1933), apps. F, G, H. 



28 



BUYING AIRCRAFT 



Several factors operated to the advan- 
tage of the engine builders. To begin 
with, the total market for aircraft engines 
was somewhat greater than that for air- 
frames since airframes normally outlasted 
engines and most aircraft users procured 
spare engines in quantities ranging up to 
100 percent of the number of aircraft on 
hand. In addition, aircraft engines, while 
still under development and subject to 
continual changes in design during the 
nineteen thirties, were not in the midst 
of a violent technological revolution as 
was the case with airframes. For a com- 
parable revolution in the engine field 
one might consider the problems subse- 
quently encountered in shifting from re- 
ciprocating to jet engines. 70 

The implications of high-volume out- 
put in the aircraft engine field were no- 
where more apparent than in the new 
Pratt and Whitney engine facility con- 
structed during 1930 in East Hartford, 
Connecticut. Here was mass production 
a whole decade ahead of the airframe 
builders. The major unit of the Pratt 
and Whitney plant consisted of a single 
floor area 1,000 feet long and 400 feet 
wide. Down the center of this area ran 
an aisle 15 feet wide. Railroad sidings 
and truck platforms brought in raw ma- 
terials at one end of this structure where 
electric trucks hauled color-coded tote 
boxes from department to department as 
fabrication progressed with aluminum 
machining on one side of the main center 
aisle and steel machining on the other. 



70 For a discussion suggesting some of the consid- 
erations that led the aircraft engine industry into 
successful production ahead of the airframe indus- 
try, see A. H. Leak, "Coordinating Aircraft Engine 
Design and Production," SAE Journal (February 
'939). PP- 8 5-92- 



Cross aisles facilitated the flow of parts 
that moved from machining departments 
to the assembly line where engines grew 
with the accretion of parts as they moved 
toward the final inspection point. Be- 
yond the inspection point were located 
another set of railroad sidings and truck 
platforms to haul away the finished prod- 
uct. 71 This was a mass production facil- 
ity. East Hartford had followed the lead 
of Detroit and pointed the way for the 
aircraft industry to pursue. Though few 
of the other engine establishments were 
so spectacular as the Pratt and Whitney 
plant, as a group the engine builders were 
acutely conscious of the need for efficient 
assembly line operation. 72 

The rising volume of aircraft sales in 
the nineteen thirties, while small in 
number and less concentrated than in the 
case of engines, did have a very real in- 
fluence on airframe production tech- 
niques. Larger orders meant longer runs, 
justifying the use of more production 
tooling. But "larger" is a relative term, 
and increases from three to thirteen air- 
planes on a single contract did not spell 
Detroit-style production. More signifi- 
cant in the middle thirties was the impact 
of the technical revolution. 

With the arrival of 40- to 60-place com- 
mercial aircraft and four-engine mono- 
plane bombers of monocoque construc- 

71 J. W. Marshall, "Line Production the Keynote 
of New Pratt and Whitney Aircraft Plant," Iron 
A§ e (July '7. 1 93°). PP- 1 5 2_ 55- See also Moritz 
Kahn, "Aircraft and Engine Factory Layout," Aero- 
digest (January 1936), p. 29. Mr. Kahn was at the 
time of writing a vice president of Albert Kahn, Inc., 
industrial architects and engineers, a firm that played 
a significant part in subsequent wartime expansion 
of the aircraft industry. 

72 The Ranger Engineering Co. facility, built in 
1928 at Farmingdale, Long Island, is a case in point. 
See Aerodigest (January 1937), pp. 2 1-23. 



AIRCRAFT INDUSTRY ON THE EVE OF WORLD WAR II 



29 



tion sporting wing spans of 60 to 100 feet, 
one manufacturer after another found his 
existing facilities utterly inadequate. As 
fast as available funds and new contracts 
would permit, the major airframe build- 
ers abandoned or enlarged their old facili- 
ties—some of them World War I remain- 
ders, some of them makeshift conversions 
from other uses— in favor of new plants 
constructed specifically for airframe pro- 
duction. 78 In 1935 Consolidated left 
Buffalo and a twenty-year-old plant with 
a patchwork of additions sprawling from 
it, to occupy an entirely new San Diego 
facility of modern design with a floor area 
of only slightly less than 450,000 square 
feet. 74 During the following year Boeing 
increased floor space to something over 
400,000 square feet with a new 60,000- 
foot addition. This new facility had a 
single unobstructed assembly area meas- 
uring 200 by 300 feet, complete with 
overhead monorail for the installation of 
heavy subassemblies such as engines, as 
well as numerous floor channels with out- 
lets for electricity and compressed air to 
run power-operated assembly tools. 75 

In explaining Curtiss' decision to ex- 
pand, President G. W. Vaughan proba- 
bly spoke for the airframe industry at 
large when he pointed out that the facil- 
ity expansion that accompanied the 1929 
boom had provided floor space fully ade- 
quate until about 1937. Then "it became 
apparent that aviation was embarking 
upon an era when quantity production 
was at a greater premium than at any 
time in the industry except during the 



73 For a discussion of this question, see W. J. 
Austin, "Modern Construction Needs of the Indus- 
try," Aerodigest (October 1937), p. 40. 

"<* Aerodigest (June 1938), pp. 34-39. 

75 Aerodigest (February 1937), pp. 32-34. 



hectic days of the World War." As a con- 
sequence, along with most of the other 
major aircraft manufacturers, Curtiss- 
Wright planned heavy capital expendi- 
tures for increased floor space. Signifi- 
cantly, here as elsewhere in the airframe 
industry, the expansion of facilities was 
based upon probable future space re- 
quirements rather than current ones. 76 
In like fashion, between 1935 and 1939 
many of the major airframe producers 
moved into modern facilities in excess 
of those required or justified by the pre- 
vailing backlog of orders. 

Unfortunately for the cause of national 
defense, the appearance of facilities fully 
adequate for continuous, straight-line op- 
erations did not actually herald the day 
of mass production. After the mid- 1930*5 
the airframe manufacturers did equip 
themselves with an impressive array of 
facilities, but, hampered as they were by 
the lack of orders for large numbers of 
units justifying long production runs, 
they continued to fabricate airplanes in 
piecemeal fashion with handwork the 
rule rather than the exception. Photo- 
graphs of the major manufacturer's as- 
sembly floors in this era reveal forests of 
stepladders and but few of the line tech- 
niques so characteristic of the auto in- 
dustry. 

During the decade of the thirties im- 
portant strides were taken toward the 
eventual achievement of the mass pro- 
duction goal. New tools are a case in 
point. As the thirties progressed, more 
and more high-speed, labor-saving de- 
vices were to be found in the industry. 
Almost any well-equipped facility in 
1938 could be expected to include high- 



76 Aerodigest (June 1938), p. 40. 



30 



BUYING AIRCRAFT 




speed presses for forming, brakes for 
shearing, nibblers and bandsaws for sheet 
cutting, as well as a variety of special pre- 
cision finishing machines for honing, lap- 
ping, and polishing. Pneumatic riveting 
devices and electric spot-welding equip- 
ment were in use to speed assembly, while 
some of the more recent developments of 
the industrial world such as optical com- 
parators and Magnaflux units provided 
accurate, efficient inspection at a produc- 
tion tempo. 77 



77 Extensive surveys of the status of the aircraft in- 
dustry with regard to tools are hard to find. Most 
of the articles in the aviation magazines and techni- 



Of more interest are those special tools 
that made possible exceptional savings in 
production. When Lockheed installed a 
big 2,000-ton Farrel-Birmingham forming 
press standing over 25 feet high, it was 
reported to be the largest in the aircraft 
industry, but soon afterward North Amer- 



cal journals arc cursory at best, usually dealing in 
experiences encountered with a single tool or type 
o£ equipment. As an example of this type of litera- 
ture, see J. B. Johnson, "Magnaflux— What Does It 
Show," SAE Journal (February 1939), pp. 59-67. For 
the most authoritative general survey, see T. P. 
Wright, "American Methods of Aircraft Production," 
Journal of the Royal Aeronautical Society (March 
•939)- 



AIRCRAFT INDUSTRY ON THE EVE OF WORLD WAR II 



31 



ican installed a 3,000-ton model and Bald- 
win-Southwork produced a 5,500-ton ver- 
sion for use in forming dural parts. 78 
With these presses, aircraft manufacturers 
could turn out sheet metal parts of far 
greater size and complexity than ever be- 
fore. Less awe-inspiring than the big 
presses, but no less significant to the pros- 
pect of speeding production, were other 
special aircraft innovations such as wood 
and rubber dies, hydraulic stretching de- 
vices, and wheeling machines to form in- 
tricate shapes at low cost. 

One of the heaviest elements of cost for 
production tooling in most modern in- 
dustries is encountered in the fabrication 
of dies for use in forming presses. Where 
automobile manufacturers retooled once 
a year, spending millions in the process, 
aircraft manufacturers introduced major 
design changes in the midst of produc- 
tion runs many times within the course 
of a year. To invest large sums of capital 
in production tools that might shortly be 
scrapped was neither desirable nor pos- 
sible under the high-cost low-volume con- 
dition of the industry. Fortunately, air- 
craft manufacturers were able to devise 
an escape through technology. Unlike 
the automobile builder, who worked al- 
most entirely with steel, the aircraft man- 
ufacturer frequently dealt in lighter met- 
als. As a result, designers discovered that 
it was possible to construct inexpensive 
dies for forming presses by replacing tool 
steel with zinc, which could be readily 
altered when design changes so dictated. 
In time, wood and hard rubber dies re- 
placed even the inexpensive zinc dies 



78 Aerodigest (April 1937), p. 7s, and (January 
'939). P- 95- 



with further savings in costs and increase 
in output. 

In the quest for lower production costs 
some manufacturers went even further 
than the low-cost die and developed the 
stretching machine, a hydraulic ram de- 
vice in which jaws gripped sheet stock at 
the edges and drew it over a wooden 
frame die. In this fashion such curved 
surfaces as engine cowling plates and 
wing tip bows could be formed at little 
expense. To achieve the same ends by 
entirely different means, other manufac- 
turers resorted to the wheeling machine, 
a novel device in which an operator fed 
sheet stock between two power-operated 
crowned wheels, tangent to one another, 
and formed curved sections of sheet by 
skillful manipulation. 79 

Cheap dies, stretching devices, and 
wheeling machines were, of course, only 
a few of the many production innovations 
that aircraft manufacturers were using on 
the eve of the war, but they typified the 
trend toward increased production with- 
out the necessity for heavy investment in 
more or less permanent tooling. Signifi- 
cantly, aircraft manufacturers in the 
United States were primarily concerned 
with production tools that cut costs. 
Those that emphasized labor reduction 
or high-speed output but involved higher 
costs remained little exploited until the 
arrival of a war market. 

Although airframe manufacturers fre- 
quently used the word production in the 



79 For some interesting comments on production 
equipment by the president of an aircraft tool firm, 
Engineering Research Co., see H. A. Berliner, "Spe- 
cial Machines Designed for Flexibility in Aircraft 
Production," Aerodigest (January 1939), pages 65-66, 
and "European Aircraft Production," Iron Age (No- 
vember 4, 1937), page 45. 



32 



BUYING AIRCRAFT 



late thirties, the industry as a whole was 
production conscious only to a very lim- 
ited degree. Perhaps the best evidence of 
this is to be found in the administrative 
organizations evolved to produce air- 
planes. In one typical large-scale manu- 
facturing establishment there were sev- 
eral groups of functional specialists: an 
aerodynamics group, a landing gear 
group, an electrical group, a fuselage 
group, a' weight control group, and, fi- 
nally, a general group handling details 
for all groups including such matters as 
specifications, preparation of handbooks, 
operating manuals, spares lists, bills of 
materials, production releases, and con- 
tract requirements. 80 Clearly, the engi- 
neers dominated the field. Emphasis was 
on design engineering rather than pro- 
duction engineering, which was lumped 
in with half a dozen other unrelated ad- 
ministrative chores. Until high volume 
demanded a change, emphasis would con- 
tinue upon design rather than upon 
production. 

More evidence of the absence of pro- 
duction-mindedness in the aircraft indus- 
try is to be found in a closer analysis. 
After twenty years of operations, most 
manufacturers continued to use locally 
designed, nonstandard business forms, 
which prevented the speedy accumula- 
tion and tabulation of data for produc- 
tion control purposes. The automobile 
industry had already pointed the way to 
what could be done with standard forms 
and punch-card business machines in 
securing production efficiency through 
stock control, unit cost control, and 
planned machine loading. However, 



80 For discussion of an illustrative administrative 
organization, see Aerodigest (June 1938), p. 39. 



while some aircraft builders recognized 
the usefulness of these innovations, there 
were still many who lacked even an ade- 
quate stock control system, without which 
any significant level of production was 
patently impossible. 81 

Still another index to the lack of pro- 
duction-mindedness amongst aircraft 
manufacturers before 1939 was the scar- 
city of articles in the aircraft technical 
journals and periodicals discussing pro- 
duction problems and production tool- 
ing. For every infrequent article on tool- 
ing and production engineering in the 
thirties, one can find literally hundreds 
of articles on experimental engineering 
and design. 82 

One manufacturer, who felt that his 
facility was approaching mass production 
when it turned out twenty-five units per 
week, summed up the essential dilemma 
of the industry concisely. Radiator caps, 
he reported, cost 20 cents each in small 
quantities. Produced in lots of 500 or 
more, the price dropped to 10 cents, but, 
with an annual output of only 550 air- 
planes, to produce 500 caps at one time 
would mean to accumulate an inventory 
with a once-a-year turnover. When ap- 
plied to a full line of parts, this process 
not only involved a high risk of obsole- 
tion in a field of rapid design change 
but also tied up large sums of working 
capital. 83 



81 A revealing view of the industry's lack of pro- 
duction-mindedness is contained in L. Cruikshank, 
"Standardized Records and Record Keeping," Aero- 
digest (February 1936), page 24- 

82 R. H. Holmes, "Some Principles for the Design 
of Aircraft Tooling," Aerodigest (November 1937), 
page 24, offers an example of the infrequent produc- 
tion engineering discussion. 

83 W. T. Piper, "Pioneering in Mass Production," 
Aerodigest (September 1937), pp. 56fF. Piper was, at 



AIRCRAFT INDUSTRY ON THE EVE OF WORLD WAR II 



33 



Without working capital, the introduc- 
tion of production tooling would be diffi- 
cult if not impossible. Without improved 
tooling, low-cost aircraft were not to be 
expected. Unless the industry could turn 
out low-cost aircraft, the mass market- 
barring war— could never be tapped. For 
this reason, the problem of how the air- 
craft industry was financed in the years 
just before World War II takes on par- 
ticular significance. 

Financing the Aircraft Industry: 
1934-38 

The financial position of the aircraft 
industry, and particularly the means by 
which it obtained money, was in the mid- 
thirties an element in the nation's defense 
no less vital than the available strength in 
aircraft reported each year to Congress. 
In theory at least, aircraft manufacturers 
could obtain working capital in three 
ways: by reinvesting profits, by borrow- 
ing, or by selling stock. 

For a generation familiar with the mil- 
lions of man-hours and billions in dollar 
values that have characterized the air- 
craft industry since World War II, it may 
be difficult to recall just how small the 
prewar business actually was. 84 As late as 
1938, Moody's Industrials, a widely used 
barometer of corporate activity, did not 
consider aircraft manufacturers signifi- 



cant enough to include them in the firm's 
annual statistical survey of operating ra- 
tios for the nation's major industrial 
groups. 85 It is against this backdrop that 
the problems of the aircraft industry's 
search for funds must be examined. 

As a source of capital, profits in the 
prewar industry appeared favorable— at 
least on the surface. A composite finan- 
cial statement for the eighteen top air- 
craft manufacturers show's a rising curve 
of net profits: 86 



Net 

Year Profit 
1935 Si. 749.000 

• 93 6 5.225.000 

• 937 8,191,000 

»93 8 17.' 39.ooo 



This curve seems to spell increasing pros- 
perity, but the round numbers in them- 
selves are deceptive. In the first place, 
the eighteen top aircraft manufacturers 
necessarily involve both Curtiss- Wright 
and United Aircraft, whose corporate 
earnings include the profits of their en- 
gine manufacturing operations along 
with airframe production, weighting the 
composite picture abnormally. More- 
over, the dollar return of the industry is 
meaningless unless measured against sales 
or capital invested. 

Profits as a percentage of sales advanced 
from a deficit in 1934 (again using the 
eighteen manufacturers' composite state- 



the time of writing, general manager of the Taylor 
Aircraft Corporation, one of the more important 
manufacturers of small, low-powered airplanes. 

84 G. M. Williams, "Growth of the Aircraft Indus- 
try," Prospects and Problems in Aviation, a series of 
papers presented at the Chicago forum on aviation 
(Chicago: The Chicago Association of Commerce, 
'945). P- 3- 



85 Moody's Manual of Investments: American and 
Foreign: Industrial Securities edited by J. S. Porter 
et al. (New York: Moody's Investors Service, 1938, 
1940, 1941) (hereafter cited Moody's Industrials), p. 
145- 

89 Aircraft Industry Financial Summary, ig Sep 47, 
National Archives, Reds of Presidential Comms, etc., 
Red Group 880, Reds of President's Air Policy Comm, 
MG2-3. 



34 



BUYING AIRCRAFT 



ment) to 10.9 percent in 1938. 87 Profits 
as a percentage of capital invested, or net 
worth, looked even better, rising from 2.9 
percent in 1935 to 15.4 percent in 1938. 
Aircraft manufacturers' profits were cer- 
tainly improving substantially during the 
middle thirties, and, in comparison with 
some of the nation's key manufacturing 
enterprises outside the aircraft field, they 
were generally superior in the second half 
of the thirties in terms of percentages. 8 * 

A composite financial statement can be 
misleading, however, for the generally 
prosperous upcurve of profits obscures 
tbe fact that individual firms, even the 
biggest and strongest in the field, might 
be encountering disastrous deficits. Boe- 
ing, for example, turned in a profit of 7.3 
percent of sales in 1936 but suffered a 
deficit of 27.7 percent of sales in 1938, 
even though the composite figures for 
these years reflect a general increase. 89 

Granting the existence of rising profits, 
it is important to determine where the 
profits went in order to appraise the in- 
dustry's capital position. The figures in 
Table 4 show that the shareholders were 
not carrying away an abnormal portion 
of the net. As a matter of fact, aircraft 
dividends were less than was typical 
among the nation's manufacturing in- 



87 Ibid. Profits as a percentage of sales for the pe- 
riod 1934-38 were as follows: 1934, -.42 percent; 
1935. 4 01 percent; ig 3 6, 7.95 percent; 1937, 6.85 per- 
cent; 1938, 10.9 percent. Compare these figures with 
those of Aircraft Industries of America, Aviation 
Facts and Figures: 1945, R. Modley, ed, (New York: 
McGraw-Hill Book Co., 1946), page 48, based on 1 2 
rather than 18 firms. 

88 See tabulations of percent net income to net 
worth and percent net income to sales presented in 
Moody's Industrials, 1940, pp. ai75ff. 

83 Moody's Industrials, 1940, p. a4off, and Aircraft 
Industry Financial Summary, L9 Sep 47. 



dustries. A substantial share of the indus- 
tries earnings, an average of 57.4 percent 
in the period shown, was available to 
plow back into the business. 

Table 4 — Percent of Earnings as Divi- 
dends and Surplus, Eighteen Top Air- 
craft Manufacturers : 1934—38 



Year 



1934. 
1935. 

1936. 
1937. 
1938. 



Dividends 


Surplus 


0.0 


0.0 


23.9 


76.1 


36.8 


63.2 


52.5 


47.5 


50.0 


50.0 



Source: Aircraft Industry Financial Summary, 19 Se 
Modley, Aviation Facts and Figures' 1945, p. 38, 



47; 



The amount available as surplus may 
appear impressive. But compared with 
deferred development charges (which give 
some clue to the industry's heavy capital 
requirements), it is evident that the sums 
available as surplus for plowing back into 
the industry may not have been adequate 
for the abnormal capital requirements of 
aircraft manufacturers in the thirties, 
when both plant replacement and design 
change had to be pursued aggressively to 
ensure competitive survival. Table s 
The relationship of surplus (undistrib- 
uted earnings) to deferred development 
charges (current costs earmarked for fu- 
ture payment) does not necessarily pro- 
vide an infallible criterion for measuring 
the degree to which profits were available 
for use in plant expansion, tool replace- 
ment, and design change or development 
work, since different manufacturers fol- 
lowed different bookkeeping practices in 
arriving at deferred development charges 
as published. 



AIRCRAFT INDUSTRY ON THE EVE OF WORLD WAR II 



35 



Table 5 — Yearly Increment to Surplus 
or Deficit Compared With Yearly In- 
crement to Deferred Development 
Charges, Eighteen Top Aircraft 
Manufacturers: 1934-38 



(Thousands of Dollars) 





Increment to 
Surplus 
(or Deficit) 


Increment to 
Deferred Develop- 
ment Charges 


1934 


S(137) 


3883 


1935 


1,332 


1,846 


1936 


3,301 


1,635 


1937 


3,904 


3 , 154 


1938 


8,547 


5,929 



Source: Aircraft Industry Financial Summary, 19 Sep 47. 

A common practice in the thirties was 
to prorate experimental costs over the 
production life of a given aircraft model, 
which normally continued to sell for sev- 
eral years. More customary was the prac- 
tice of selecting a fixed number of aircraft 
sales against which to prorate develop- 
ment costs. If sales failed to reach the 
predetermined figure, the firm would 
show a loss for that particular model. 
Some manufacturers restricted develop- 
ment costs to the sales of a given model 
in its initial year of production, showing 
a profit or loss depending upon the mod- 
el's sale in that year. It is evident that 
profits and ultimately the capital avail- 
able for plowing back into the industry 
could, within certain limits, be juggled 
at will by a careful selection of bookkeep- 
ing methods and thus make it possible to 
show a profit or loss in any given year 
almost according to desire. 90 



Wide deviations in deferment policies 
suggest grave dangers in seeking an index 
to the industry's ability to finance itself 
from earnings by comparing surplus with 
deferred charges. In addition, the exist- 
ence of these differing policies suggests a 
revealing insight into the sometimes sur- 
prising spread between extremely high 
and low bids in price competition on 
comparable items. Comparisons of one 
manufacturer with another, in the light 
of widely different accounting practices, 
are dangerous to make and difficult if not 
downright impossible to use with accu- 
racy. 

One more factor affects the role ol 
profits as a source of operating capital. 
In 1934 Congress passed the Vinson- 
Trammell Act setting a legal profit limit 
of 10 percent on Navy contracts, includ- 
ing aircraft. Not until later were the pro- 
visions of the act extended to cover Air 
Corps contracts. However, insofar as 
Navy contracts contributed to the indus- 
try's gross during the middle thirties, a 
ceiling was imposed on the amount of 
capital aircraft manufacturers could de- 
rive from profits. 91 While this ceiling did 
impound profits of the engine and acces- 
sory manufacturers, in practice airframe 
producers seldom computed profits on 
military contracts in excess of the ceiling 
imposed. 92 The Vinson-Trammell Act 



90 For a brief discussion of deferred development 
charges, see Aviation Industry in the United States, 
page 97, and Appendix Table IX, Analysis of De- 



ferred Development Expenses, showing deferred 
charges as a percent of sales and as a percent of total 
assets; and amortization of development as a percent 
of sales and as a percent of deferred development. 

01 Vinson-Trammell Act, 73d Cong, 2d sess, March 
27. 1934 (48 Stat 503). 

92 The two major engine producers showed profits 
over a ten-year period ending in 1937 averaging 17 
percent (Harding, Aviation Industry, pp. 25-27). Air 
Corps audits and cost studies covering thirty con- 
tracts in 1937 and 1938 showed that accessory manu- 



36 



BUYING AIRCRAFT 



prohibited profits over 10 percent but 
did not guarantee profits up to that fig- 
ure. Losses, especially those incurred on 
research and development or experimen- 
tal contracts, could and sometimes did 
absorb the entire margin allowed on 
more successful production contracts. Al- 
though subsequent amendment mitigated 
this type of loss somewhat, the outlook for 
creative profits from military contracts 
was far from bright in the late thirties, 
a time when manufacturers were looking 
for capital with which to refurbish the 
industry. 

Even more than legal limits and book- 
keeping procedures, the dynamic charac- 
ter of aircraft design itself contributed 
significantly to the limits on profits dur- 
ing the prewar years of rising sales. The 
inadequacy of earnings to meet these re- 
search charges is suggested by the fact 
that twelve leading manufacturers poured 
$5,200,000 into development costs during 
1937-38 and deferred sums during the 
same period amounting to $2,300,000, or 
nearly half of the total allocated to devel- 
opment. 93 While deferred charges are 
perhaps unreliable as a measure of capi- 
tal requirements, other figures contain 
the same implications. Over the period 
1934-38, the aircraft industry as a whole 



facturers averaged profits of 20 percent. Airframe and 
accessory manufacturers, excluding one serious air- 
frame contract debacle, showed an average profit of 
18 percent (Chief, Finance Div, to Maj Gen H. H. 
Arnold, 1939, AAG 120 Misc, Funds and Disburse- 
ments), For evidence of profits in earlier years, see 
Freudenthal, Aviation Business, Table V, p. 123, de- 
rived from Delaney Hearings, p. 496, and Aviation, 
October 1938, pp. 35-36. 

93 Aircraft Industries Assn., Industry Planning 
Memorandum, Financial, Series 13-2, October 1, 
1947, Table IV, Composite Balance Sheet for Twelve 
Leading Airframe Manufacturers, AIA office files. 



is reputed to have put 9.4 percent of its 
gross into research, whereas profits 
amounted to but 5.8 percent of gross. 94 
In a period of rapid technical flux, invest- 
ment in a particular design involved a 
continuing gamble, for new and more ex- 
tensive capital outlays on still more ad- 
vanced designs might be and frequently 
were required long before the previous 
model had amortized itself, thus impel- 
ling further investment of earnings or 
deferment of charges or both. 

So long as the aircraft industry contin- 
ued to experience a high rate of design 
change and a low level of production, 
even a rising general level of profits 
proved inadequate as a source of capital. 
Leaving in abeyance for the moment the 
relative adequacy of profits as a source of 
capital, it may be useful to consider bor- 
rowing, the second source of capital avail- 
able to the aircraft builders. 

The aircraft industry, like most of the 
nation's industries, regularly resorted to 
the banks for cash to meet short-term re- 
quirements such as initial inventories or 
labor costs before payments on delivery 
of finished products. Bank loans, how- 
ever, represented only a small portion of 
the industry's total current assets, about 
2 or 3 percent in 1937 and 1938. 05 More- 
over, these commercial loans did not rep- 
resent new capital in the strict sense of 
the word. They were limited in volume 
by the liquid assets of the borrower 
rather than by the prospect of future 
earnings, as would be the case with funded 
debt or long-term interest-bearing bonds. 



9 *J. Lloyd, "Stockholders' Panorama of the Air- 
craft Industry," Magazine of Wall Street (November 
1 8, 1939), pp. 146-65- 

93 AIA, Industry Planning Memorandum, cited 

n. 93- 



AIRCRAFT INDUSTRY ON THE EVE OF WORLD WAR II 



37 



For a number of reasons the aircraft 
industry was unwilling or unable to se- 
cure capital in the bond market. Long- 
term debt, whether in the form of mort- 
gages, notes, or bonds, would require 
fixed interest charges that must be met 
annually or cumulatively as a part of 
fixed overhead. So long as the aircraft 
industry remained dynamic, both as to 
design and as to production levels, earn- 
ings would continue to be problematical 
and always something of a gamble. Be- 
cause of these circumstances, the aircraft 
manufacturers in the thirties continued 
the practice of the twenties and acquired 
almost no funded debt. 96 One important 
exception to this pattern involved a near 
disaster. 

In 1929, near the peak of the boom, 
the Glenn L. Martin Company moved 
into an efficient new plant at Middle 
River not far from Baltimore, Maryland. 
The collapse of the market curtailed the 
company's plans to finance the new un- 
dertaking with equity capital and, in- 
stead, Martin turned to funded debt with 
6 percent 5-year notes for some $3,000,- 
000. The continuing depression and a 
series of misfortunes reduced Martin 
earnings to deficits despite the fact that 
the company was a leader in the design 
field. Unable to meet its obligations ma- 
turing in 1934, Martin went through 
Section 77B of the Federal Bankruptcy 
Act. The company recovered when the 
arrival of war sales helped liquidate the 
notes that had been renegotiated to 1939, 
but the painful experience stood as an 
object lesson for all aircraft manufac- 

86 Dodd, Financial Policies in the Aviation Indus- 
try, pp. 86-90; Harding, Aviation Industry, Title XI, 
p. 6.1. 



turers to see. 97 Since such a leader in the 
aircraft field as Martin skirted disaster 
with funded debt, it is not difficult to ap- 
preciate the reluctance of the industry at 
large to consider such borrowing to raise 
capital. Obviously, then, only one source 
of capital, the stock market, remained to 
be tapped. 

There were serious disadvantages in 
any extensive use of equity capital. Every 
share sold in the market diluted mana- 
gerial control. Moreover, if a given man- 
ufacturer intended to rely upon the mar- 
ket for capital to any great extent over a 
prolonged period of time, he must show 
occasional profits and pay encouraging 
dividends or his source of capital might 
dry up. 

There were numerous factors in the 
middle thirties militating against the sale 
of aircraft manufacturers' securities. First, 
some of the major producers, burdened 
with the unfortunate heritage of the 
speculative boom, were heavily overcapi- 
talized. Overcapitalization implied a di- 
lution of earnings. Prudent investors nor- 
mally eschewed the offerings of all such 
corporations. Second, the high rate of 
design flux obviously ate heavily into 
profits, promising the investor a low 
yield, if any, so long as the pace of devel- 
opment continued to be rapid. Frequent 
federal investigations of one character or 
another constituted a third factor weight- 
ing the balance against equity capital. 
Ever since the Hughes investigation of 
1918, special hearings on the aircraft in- 
dustry, congressional or otherwise, fol- 
lowed one another almost annually, and 

Fortune (December 1939), pp. 73-77; Aviation 
Industry in the U.S., pp. 185-89. Curtiss-Wright also 
labored under a heavy burden o£ funded debt in the 
1930's. 



38 



BUYING AIRCRAFT 



each raised as many problems as it solved, 
creating a state of permanent uproar, un- 
rest, and uncertainty throughout the in- 
dustry generally by raising fears of inter- 
vention, nationalization, or at the very 
least, profit limitation. Still another con- 
sideration affecting the investor's judg- 
ment against aircraft shares is to be found 
in the very complexity of the industry it- 
self. Dynamic problems of design and 
production, uncertainties resulting from 
the political influences affecting the sale 
of aircraft, and, not least in this enumera- 
tion, the diversity of accounting proce- 
dures, warned against investment in the 
aircraft industry. 

Among the many pressures against in- 
vestment in aircraft manufacturing were 
the warnings of the nation's brokers and 
market analysts. The aircraft business, 
warned a writer in Barron's, was "swift, 
turbulent and erratic," clearly "a field for 
speculation and not for investment." 9S 
A few months earlier, the Magazine of 
Wall Street declared that there were only 
twenty-two interesting investment oppor- 
tunities among the sixty-odd corporate 
aircraft offerings of the nation and at least 
half of the twenty-two were regarded as 
shaky and liable to go under entirely or 
submit to merger." More significantly, 
even investment research organizations 
warned that there were no "gilt edged 
securities" in the aircraft industry, where 
shares tended to fluctuate more violently 
than securities in most other manufactur- 
ing industries. The best that could be 



us H. Lawrence, "New Wings for Aviation," Bar- 
ron's (January 25, ig 3 7), p. t 5 . 

n!) C. M. Turner, "Aviation Begins to Earn Money," 
Magazine of Wall Street (October 10, 1936), pp. 
760-62. 



said of investment in aircraft manufac- 
turing shares seemed to be that it was 
speculative and therefore "potentially 
profitable." 100 In short, the experts 
warned that the aircraft industry pre- 
sented far too complex a picture for safe 
investment. 

In view of the apparently overwhelm- 
ing number of considerations advising 
against investment in aircraft securities, 
it is certainly surprising to find that the 
industry was able to raise significant sums 
in the stock market. From 1936 right on 
down through the war years of peak pro- 
duction, every aircraft manufacturer who 
placed offerings in the market was able 
to sell stock in quantities sufficient to 
cover current losses and meet working 
capital requirements. 101 Perhaps the 
clearest indication of this willingness to 
absorb aircraft securities is to be seen in 
the case of Lockheed. Reorganized in 
1933 after a period in the hands of a re- 
ceiver, the corporation had three times 
sold shares to bring in working capital 
by 1938. That such a firm could enter 
the market that frequently and still ac- 
quire capital readily is indicative of the 
availability of equity capital to the in- 
dustry despite the forebodings of the 
brokers. 102 Between 1933 and 1939, Bell, 



100 Harding, Aviation Industry, chs. V-VIII. 

101 Aircraft Industry Financial Summary, Septem- 
ber ig, 1947, summary and conclusions based on com- 
posite of annual statements of eighteen leading air- 
frame manufacturers, 

102 Aviation Industry in the U.S., pp. 182-84. Fr&ni 
1958 to 1941, the Big Six— Boeing, Consolidated, 
Douglas, Lockheed, Martin, and North American- 
all airframe manufacturers, raised their capital and 
plant by $67,000,000, $23,000,000 or approximately 
one-third of which came from the sale of securities. 
See F. A. Callery, "Review of American Aircraft Fi- 
nance," Air Affairs (Summer 1947), p. 485. 



AIRCRAFT INDUSTRY ON THE EVE OF WORLD WAR II 



39 



Boeing, Curtiss- Wright, Douglas, Fair- 
child, Lockheed, Martin, Northrop, Re- 
public, and United, to name a few of the 
larger firms, raised a total of more than 
$30,000,000 in new capital with anywhere 
from one to three offerings. 103 

This curious ability to secure equity 
capital in spite of the numerous draw- 
backs calls for an explanation. In the 
first place, there is some evidence to indi- 
cate that aircraft shares were heavily if 
not largely held by speculators rather 
than investors and therefore somewhat 
less subject to the normal demands of 
prudent investment. 104 Thus, while it is 
true that even shares bought at the mar- 
ket low in 1937 or 1938 would yield only 
a return ranging from 1.5 to 4.5 percent 
at best, speculators, anticipating substan- 
tial market advances with the probable 
coming of war, might well be willing to 
buy aircraft shares. 105 Secondly, whether 
those who bought aircraft shares were 
speculators or investors, they appear to 
have been swayed more by anticipation 
of future prospects than by the current 
technical adequacy, managerial compe- 
tence, or financial position of the in- 
dustry. 106 

While the stock market proved to be 
a comparatively ready soufce of capital 
for the aircraft industry, each new stock 



103 Aircraft Industry Financial Summary, 19 Sep 47, 
summary and conclusions based on composite of an- 
nual statement of eighteen leading airframe manu- 
facturers. 

104 Woods, Aircraft Manufacturing Industry, p. 35. 

105 Modley, Aviation Facts and Figures: 19-f}, Table 
4-10, p. 48. 

106 See, for example , page 492, comments of F. A. 



Callery, cited n. ioa| and analysis of the Brewster 



firm's fund-raising experience in relation to produc- 
tion record, in Aircraft Industry Financial Summary, 
19 Sep 47. 



issue imposed its obligation of dividend 
payments to keep the market interest and 
each new share diluted earnings and mag- 
nified the problems of corporate control. 
At best the stock market was a last resort, 
and the extent to which the industry re- 
lied upon equity capital is a rough meas- 
ure of the inadequacy of earnings to meet 
the demands of the industry. However, 
this rough measure provides only a rela- 
tive comparison of these sources of capi- 
tal; the central problem still remains: to 
determine the financial condition of the 
aircraft industry as a factor in its ability 
to meet the war crisis when it arrived. 

The record of rising profits in the 
1935-38 period gives a superficial picture 
of prosperity and fiscal soundness. The 
volume of business was certainly rising, 
yet this in itself was no positive indica- 
tion that the industry was attaining a 
sounder financial structure. To secure 
such an indication some yardstick other 
than profits is essential. 

The current ratio of the aircraft indus- 
try offers one useful index of the indus- 
try's financial position. In effect, the 
current ratio of an industry, the ratio of 
its current assets to its current liabilities, 
is a statement of its working capital posi- 
tion. The current ratio indicates the 
margin by which available assets, such as 
cash, inventory, and other easily conver- 
tible resources, cover claims such as notes 
and accounts payable. The lower the 
current ratio falls, the closer the indus- 
try moves to the bare break-even point. 
A decreasing ratio spells a relatively weak 
financial position, for an industry with 
assets barely able to meet its obligations 
is obviously ill prepared to meet abnor- 
mal capital demands or adverse business 
conditions. The utility of the current 



40 



BUYING AIRCRAFT 



ratio as a yardstick is further enhanced by 
the circumstance that it provides a basis 
for comparison between industries with- 
out regard for differences in scale of oper- 
ations. 

A comparison of current ratios between 
the nation's manufacturing industries in 
general and the airframe industry in par- 
ticular reveals that during the prewar 
years airframe manufacturers came to oc- 
cupy a less favorable financial position 
than other manufacturers. The follow- 
ing figures indicate the extent to which 
this was true for an important portion of 
the industry: 107 

'9)5 '93 6 '937 J 93& 

goo manufacturers 

(nonaircraft) 4.8 4.2 4.0 4.9 

6 major airframe firms... 4.9 5.4 2.8 3.5 

Enlarging the size of the sample to em- 
brace twelve leading airframe manufac- 
turers does not improve the general pic- 
ture. The average current ratio for the 
larger group was 2.0 in 1937 and 2.7 in 
1938. This was in contrast to the rela- 
tively superior current ratio of 4.0 or 
higher for the nation's manufacturing in- 
dustries as a whole. 108 These considera- 
tions suggest that the rising curve of air- 
craft profits was deceptive as a guide to 
the financial position of the aircraft in- 
dustry. As the volume of sales mounted, 



107 Figures computed from Moody's Industrials. 
Current ratio for U.S. industries 1935-37 based on 
316 firms in 1938 edition, p. 41a; 1938 figures based 
on 307 firms in 1941 edition, p. 46a. Current ratios 
for six leading airframe manufacturers (Boeing, Con- 
solidated, Douglas, Lockheed, Martin, and Norm 
American) from financial statements of these firms 
in 1940 edition of Moody's Industrials. 

los Aircraft Industries Assn., Industry Planning 
Memorandum, Financial, Series 13-2, 1 Oct 47, Table 
4, Composite Balance Sheet for Twelve Leading Air- 
frame Manufacturers. 



the industry incurred obligations that 
pressed the industry closer to the bare 
level of solvency. The financial position 
of the aircraft industry on the eve of the 
war became increasingly stringent as cur- 
rent commitments expanded toward the 
danger point. 109 

The importance of a declining current 
ratio as a yardstick to the financial posi- 
tion of the aircraft industry is suggested 
in a comparison of working capital to 
sales. Where twelve leading aircraft man- 
ufacturers increased their working capi- 
tal 2.6 times between 1934 and 1938, sales 
in these years increased almost exactly 
fivefold. 110 All this came at a time when 
design change and factory refurbishment 
imposed an abnormally heavy capital re- 
quirement upon the industry. 

It is possible to identify still other oper- 
ating ratios that tend to substantiate the 
current ratio observations. The relation- 
ship of inventory to current assets is just 
such a ratio. A large inventory is a dis- 
tinct disadvantage because it ties up work- 
ing capital and increases the probability 
of losses resulting from design changes 
that leave obsolete stock in storage. Since 
the nation's typical prewar manufactur- 
ing industry maintained an inventory val- 
ued between 40 and 50 percent of current 
assets while the airframe manufacturers 
carried inventories valued at 50 to 60 per- 
cent of current assets, the inventory capi- 
tal requirements of the aircraft industry 



100 Computed from financial statements of six lead- 
ing airframe manufacturers in Moody's Industrials, 
1940. For a discussion of the need for adequate capi- 
talization, see L. L. Putnam, "Too Much Money or 
Too Little— Both Bad," Airway Age, vol. 1a (May a, 
ig3i), 481-84. 

1,0 Aircraft Industry Financial Summary, 19 Sep 47. 



AIRCRAFT INDUSTRY ON THE EVE OF WORLD WAR II 



41 



were surely equal to and probably greater 
than those of most of the nation's manu- 
facturing industries. 111 Under these cir- 
cumstances, a diminishing current ratio, 
narrowing the gap between current assets 
and current liabilities, constituted a seri- 
ous difficulty adversely affecting the air- 
craft industry's financial position in the 
crucial years just before the war. 

In assessing the industry's financial con- 
dition as an element of the nation's air 
power on the eve of World War II, the 
question of the tangible curbs imposed 
on plant expansion or research and de- 
velopment by capital inadequacies is an 
insufficient standard of measurement. 
The attitudes of the directors, corpora- 
tion officers, and managers who deter- 
mined policy throughout the industry 
were likewise important. Most of these 
men had occupied responsible positions 
of one sort or another during the preced- 
ing decade. The memory of the boom 
era and its extravagant overexpansion of 
production facilities and subsequent con- 
traction, collapse, and disaster must have 
been a painful reality to many of them. 
The financial position of the aircraft in- 
dustry in the late thirties, when set 
against the backdrop of disasters experi- 
enced in the early thirties, could scarcely 



111 Ratio of inventory to current assets for industry 
in general based on 307 firms, 1934-3R. Moody's In- 
dustrials, 1941, p. 46a. See also 1938 edition, p. 41a. 
The ratio for aircraft industry is based on an unfor- 
tunately small sample covering the years 1934-38, 
Moody's Industrials, 1940, pp. 177-1793. Comparable 
data for 1939 in L. O. Ballinger and T. Lilley, Finan- 
cial Position of the Aircraft Industry, Business Re- 
search Study, No, s8, Harvard Business School, Octo- 
ber 1943, confirm this sample. The author is in- 
debted to this excellent study, covering a somewhat 
later span of years than those discussed here, for a 
number of valuable insights into the problems of air- 
craft industry finance. 



avoid filling industry leaders with a zeal 
for caution, a reluctance to undertake 
commitments beyond their ability to con- 
summate, and an almost obsessive desire 
not to expand capacity beyond the point 
of anticipated market requirements. 
These attitudes, seldom directly expressed 
and therefore hard to document but not 
necessarily less real for that reason, may 
offer an important clue to the fuller un- 
derstanding of the era following 1938. 
As the crisis mounted and the nation 
moved slowly toward a war footing, a sub- 
stantial explanation of manufacturers' re- 
luctance to expand to meet anticipated 
war orders might be found in the indus- 
try's financial position, where a shrinking 
current ratio heralded a decline to the 
bare level of solvency and, on occasion, 
even a dip into deficits. 

Yet, despite all its pressing problems, 
the aircraft industry on the eve of the 
war was not in a fundamentally unhealthy 
condition. The rising ratio of earnings 
to net worth clearly reflected a sound 
earning power. To be sure, within the 
general pattern of this healthy condition, 
the industry was confronted with a knotty 
problem, an abnormally acute demand 
for capital resulting from the peculiar 
coincidence of requirements for funds to 
push development endlessly while at the 
same time effecting major plant refur- 
bishments. So voracious was the cry for 
capital that even this admittedly healthy 
industry with rising profits was unable to 
meet its needs. Clearly, the only practical 
solution was to be found in a high vol- 
ume of production, which might pile up 
earnings faster than research and devel- 
opment or facility expansion costs could 
consume them. Sales, then, held the key 
to the industry's fiscal difficulties. And 



42 



BUYING AIRCRAFT 



so long as a major portion of the market States would in a large measure depend 
comprised military aircraft, the volume upon the size of the appropriations voted 
of aircraft production in the United for that purpose by Congress. 



CHAPTER III 

Congress and the Air Arm 



Soon after the outbreak of World War 
II in September 1939, it became evident 
that the United States was woefully un- 
derarmed. The dramatic assaults of the 
Luftwaffe drew particular attention to 
the small size of the air arm and touched 
off a round of charges and countercharges 
seeking to pin down responsibility. Some 
blamed Congress; congressmen were in- 
clined to blame the War Department or 
the Bureau of the Budget. 1 Seen in the 
perspective of time, these allegations 
and recriminations have little signifi- 
cance save insofar as they demonstrate 
the complexities of the processes by which 
air strength is decided. 

The Constitution empowers Congress 
to raise and equip armies for the common 
defense. From its earliest sessions, Con- 
gress appropriated funds and passed en- 
abling legislation for military purposes, 
but the distinction between policy legis- 
lation on the one hand and appropria- 
tions on the other was never clearly 
drawn. "Legislation by appropriation" 
occurred frequently as overlapping com- 
mittees considered un-co-ordinated de- 

1 Sec, for example, remarks on the War Depart- 
ment by Representative J. Buell Snyder, Chairman, 
House Appropriations Subcom, quoted in Elias Hu- 
zar, "Military Appropriations, 1933-42," Military 
Affairs, VII (Fall 1943), 141; remarks by Representa- 
tive R. A. Collins, of Mississippi, Cong Red, March 
3, 1939, p. 2323. For a prewar instance of War De- 
partment efforts to pass responsibility to Congress, 
see Baker Board Report, pages 48, 54. 



partmental bills piecemeal. With the 
passage of the epoch-making Budget and 
Accounting Act of 1921, however, Con- 
gress introduced revolutionary changes 
in organization and procedure. In place 
of piecemeal consideration of estimates 
by the standing committees of the House 
and Senate, henceforth all money bills 
were to be considered by a Committee 
on Appropriations in each house. These 
committees held full jurisdiction over all 
estimates but were specifically enjoined 
against the inclusion of legislative matter 
in appropriation acts. Military policies 
of statutory character thus fell within the 
purview of a Military Affairs Committee, 
while consideration of estimates to pro- 
vide funds to carry out these policies fell 
to an Appropriations Committee. 2 

The upper limit of strength for the air 
arm was determined by legislative au- 
thorization while the lower limit was de- 
termined by the funds actually appropri- 
ated. Since the processes of authorization 
and appropriation involved utterly dif- 
ferent sets of factors and were considered 
by two entirely distinct committees in 
both the Senate and the House, each must 
be analyzed in turn. 



2 For a discussion of the effect of the Budget and 
Accounting Act of 1921 upon congressional organi- 
zation and procedures, see William Franklin Wil- 
loughby, The National Budget System, With Sugges- 
tions for Improvement (Baltimore: The Johns 
Hopkins Press, 1927), chs. II, IV. 



44 



BUYING AIRCRAFT 



Authorized Strength: How Many 
A ircraft? 

The National Defense Act of 1920 con- 
stituted a major revision in the legislative 
basis of the War Department. 3 Supposed- 
ly, it represented the best accumulated 
experience of the World War I years 
codified into statutory form. Building on 
the precedents set by the various arms and 
services in years gone by, the act made 
no attempt to determine the strength of 
the Military Establishment other than to 
impose a ceiling on officers and men and 
to apportion manpower to the arms and 
services according to their relative im- 
portance. Under this provision the Air 
Service was allotted a ceiling of 16,000 
men and 1,514 officers; no mention of 
strength in aircraft appeared in the act. 

That the troop basis may have been a 
faulty premise upon which to regulate 
air arm strength is suggested by the prece- 
dent and practice of the Navy. Congress 
decided upon the number and type of 
major vessels required for the national 
defense and then provided the manpower 
necessary to operate them. In arranging 
for a manpower allotment in the Air 
Service without any reference to aircraft 
strength, the officers who helped to draft 
the Defense Act and the congressmen 
who voted for it apparently did not an- 
ticipate the strategic potentialities of the 
air weapon. As a consequence, during 
the early twenties, the number of aircraft 
available depended upon the accidents 
and contingencies that determined the 
funds given to the Air Service and not 



3 National Defense Act, June 4, 1920 {41 Stat 759), 
amending the earlier organic statute of the Army, 
National Defense Act, June 3, 1916. 



upon policy based on strategic consider- 
ations. 

Funds specifically earmarked for the 
procurement of new aircraft fell from 
$6,000,000 in 1921 to something over 
$2,500,000 in 1925. 4 Lacking well-de- 
fined objectives, Air Service officers re- 
sorted to expedient makeshifts deter- 
mined by each year's appropriation. 
Long-term program planning proved to 
be impossible, and without comprehen- 
sive aircraft procurement programs pro- 
jected over several years, the Air Service 
soon acquired a heterogeneous collection 
of equipment of questionable military 
utility. Responsible officers began to 
doubt whether the Air Service could per- 
form the limited tactical role then envi- 
sioned for it. To remedy this situation, 
the Secretary of War appointed a special 
board under the chairmanship of Maj. 
Gen. William Lassiter to consider a thor- 
ough reorganization suggested by the 
Chief of the Air Service. 

The Lassiter Board 

The War Department's special board 
appointed in March 1923 to study the 
Air Service could scarcely be said to have 
been weighted in favor of the air weapon. 
Five of its seven members were high-rank- 
ing officers on the General Staff; another 
came from the Quartermaster Corps. 
Only one, the lowest ranking member, 
was an Air Service officer, and much of 
his service had been with balloons. Nev- 
ertheless, after deliberations lasting more 
than a month, the Lassiter Board sub- 
mitted a report that surveyed the air 



4 See War Department Appropriation Act (41 Stat 
953) for fiscal year 1921 and successive years. 



CONGRESS AND THE AIR ARM 



45 



power problem with unusual perception. 
Even today the report retains a cogency 
that commends it to all who seek an un- 
derstanding of the air weapon. Borrow- 
ing freely from the Italian air power the- 
orist, Giulio Douhet, the board divided 
air power into two categories: air service 
and air force. The former consisted of 
those units whose primary function it 
was to provide service as auxiliaries to the 
ground arms. Artillery-spotting and ob- 
servation aircraft fell in this group. The 
latter embraced pursuit, bombardment, 
and attack or close support units capable 
of offensive roles. Both air service and 
air force were conceived as organic parts 
of the ground organization, with the num- 
ber of aircraft required depending upon 
the number of divisions, corps, and ar- 
mies contemplated for the ground force 
in the event of war. On this premise the 
Lassiter Board visualized a war strength 
of 8,756 aircraft. The peacetime estab- 
lishment was set at the minimum neces- 
sary to provide an adequate cadre from 
which to expand to the planned war foot- 
ing. The board set this cadre require- 
ment at 2,500 aircraft, of which fewer 
than 25 percent were to be used for fly- 
ing training. Approved by the Secretary 
of War, the Lassiter Board report became 
the fundamental air arm policy of the 
War Department after April 1923. 5 



5 The full text of the Lassiter report is nowhere 
available in published form; the Library of the In- 
dustrial College of the Armed Forces contains a 
mimeographed copy of the original. Details con- 
cerning the board and the fate of the report, as well 
as a precis of its text, can be found in Hearings be- 
fore the Select Committee on Inquiry Into Opera- 
tions of the United States Air Service, House, 68th 
Congress, 1934-25 (hereafter cited as Lampert Hear- 
ings), I-VI, passim, especially 1737-38. See also, 
WPD staff paper prepared for the Howell Comm 



The Lassiter report followed the con- 
cept implicit in the Defense Act of 1920 
in premising air strength upon the Army 
ground force or a troop basis. In the ab- 
sence of a well-defined and experience- 
proven doctrine on air power, the troop 
basis concept provided a convenient for- 
mula for deciding how many aircraft the 
Army needed. As early as March 1917 
the formula had been employed in plan- 
ning the air component for the million- 
man army then being organized. 6 Gen- 
eral Staff officers continued to use the 
formula in planning studies during and 
after World War I, although some Air 
Service officers, notably Brig. Gen. Wil- 
liam (Billy) Mitchell, protested that 
the number of aircraft required should 
bear no relation whatsoever to the num- 
ber of men in the Army as a whole. 7 
These voices of protest were ignored for 
the time being, and air strength contin- 
ued to be determined by the number of 
troops available to the Army. 

Each time budgetary retrenchment cut 
back the size of the Army in the early 
twenties, the Air Service suffered its share 
of the necessary reduction in manpower. 
Manpower deficiencies led the General 
Staff to cut Air Service strength more 
than 500 aircraft below the approved 
minimum. 8 Congress, legislating through 
appropriations, went further, until by 
June 1925 the air arm had on hand only 
1,436 aircraft, of which 1,040 were obso- 



Aug 34, mimeographed, Historical Background, 
WPD-OPD files 888-92. 

6 Lampert Hearings, p. 1257. 

7 Ibid., p. 1894. See also, Irving Brinton Holley, jr., 
Ideas and Weapons, (New Haven, Conn.: Yale Uni- 
versity Press, 1953), ch. X, passim. 

8 Lampert Hearings, p. 1739. 



46 



BUYING AIRCRAFT 



lete or obsolescent and only 396 were 
classified as standard. 9 

Air Service officers who protested the 
condition of the air arm were joined by 
interested manufacturers in search of con- 
tracts, Their combined cries, in conjunc- 
tion with a series of allegations as to war 
profiteering and patent abuse and the 
Mitchell air power controversy, produced 
an investigation by a congressional com- 
mittee under the chairmanship of Repre- 
sentative Florian Lampert of Wisconsin. 

The Lampert Committee 

Alter taking several thousand pages of 
evidence during 1924 and 1925, the Lam- 
pert Committee reported a number of 
specific recommendations to Congress. 
In substance the committee confirmed 
the findings of the Lassiter Board: the 
lack of an effective Air Service procure- 
ment program had helped to reduce the 
nation's aircraft industry as well as the 
air arm itself below an effective minimum 
level. 10 Since War Department represent- 
atives reiterated their intention to ful- 
fill the Lassiter 2,500 aircraft program, 
pointing out that the Department had 
actually favored the Air Service with 
funds originally allocated for other uses, 
the committee members were led to be- 
lieve that budget cuts rather than War 
Department antagonism accounted for 
the prevailing state of the air arm. 11 To 
rectify this situation the committee rec- 
ommended, among many other things, 
that a definite five-year program of pro- 



9 Hearings before the President's Aircraft Board, 
1925 (hereafter cited as Morrow Hearings), p. 1680. 

10 House Rpt 1653, 68th Cong, 2d sess, December 
14, 1925 (hereafter cited Lampert Rpt), pp. 4-5. 

11 Lampert Hearings, p. 1827. 



curement be prepared and that Congress 
appropriate $10,000,000 each year for 
new aircraft, leaving the exact number to 
be procured to the military authorities. 12 
Air Service officers and aircraft manu- 
facturers must have been pleased with 
the Lampert report, but the committee's 
recommendations were little more than 
pious hopes in no way binding upon the 
War Department or Congress since the 
recommendations were not immediately 
enacted into statutes. The Lampert Com- 
mittee hearings were by no means wasted 
effort, however. Shortly before the com- 
mittee published its final report, and per- 
haps as a counteroffensive in anticipation 
of that report, the Secretaries of War and 
Navy asked the President to set up a 
board to study air power and the national 
defense. The President complied, ap- 
pointing a board under the chairmanship 
of the distinguished banker and Morgan 
partner, Dwight W. Morrow. 

The Morrow Board 

After hearing nearly a hundred wit- 
nesses and adding four volumes of testi- 
mony to the five volumes already pub- 
lished by the Lampert Committee, the 
Morrow Board submitted its report to 
the President. 13 W r hile not absolutely 
binding upon the War Department, the 
Morrow recommendations, as the consid- 
ered findings of the chief executive's ap- 
pointees, carried a weight with War De- 
partment officers not generally accorded 
the earlier congressional report. The 

12 Lampert Rpt, p. g. 

13 S Doc 18, 69th Cong, 1st sess, Aircraft in Na-, 
tional Defense (hereafter cited as Morrow Rpt), No- 
vember go, 1925. 



CONGRESS AND THE AIR ARM 



47 




The Morrow Board and Douglas Transport at International Air Races, Mitchel 
Field, N.Y., October 1925. 



Morrow Board recommendations differed 
markedly from those of the Lampert 
Committee in a number of points not 
pertinent here but, with respect to the 
question of air arm strength, the two re- 
ports agreed on the need for a compre- 
hensive program of aircraft procurement 
projected over a number of years. Al- 
though the Morrow Board favored a five- 
year procurement program, in general it 
was far less emphatic than the Lampert 
report had been, especially when dealing 
with technical details. For example, by 
referring the whole question of aircraft 
strength to the War Department as a sub- 
ject for "further study under competent 
authority," the board evaded one of the 
major problems that had led to its ap- 
pointment. The board was equally vague 



about funds, suggesting only that special 
appropriations from Congress were 
"worthy of consideration" over the next 
few years. 14 

When at last the protracted investiga- 
tions were over and Congress began to 
formulate new legislation to cure the ills 
of the Air Service, there seemed to be gen- 
eral agreement among the investigators 
on three points concerning air arm 
strength: a continuing procurement pro- 
gram should be adopted; Congress should 
appropriate more money for new aircraft; 
and decisions on the exact numbers and 
composition of the air weapon should be 
left to the War Department. In this set- 
ting Congress passed the Air Corps Act of 
1926, a landmark in air arm history. 



11 Ibid., p. 2 1 . 



48 



BUYING AIRCRAFT 



The Air Corps Act 

Following a lengthy study, which made 
extensive use of the evidence published 
by the Lampert and Morrow groups as 
well as by a number of others, the House 
Military Affairs Committee finally re- 
ported out a bill setting up an Air Corps 
as a combat arm of the line. The bill 
proposed increased personnel authoriza- 
tions to be made by additions to the Army 
total rather than by transfers from the 
allocations of other arms and services, a 
provision shrewdly drawn to avoid an- 
tagonizing the ground forces. The bill 
further proposed to authorize a minimum 
of 2,200 aircraft for the Air Corps. Only 
standard units not yet declared obsolete 
were to be included in this number, al- 
though the 2,200 total did cover alloca- 
tions for National Guard and Organized 
Reserves use as well as provision for an 
annual replacement increment of ap- 
proximately 400 aircraft "on order." 15 

Here was specific congressional author- 
ization for a fixed number of aircraft, a 
policy formulated by the Military Affairs 
Committee rather than by the Appropri- 
ations Committee. But why the figure 
2,200? Just as neither the Lampert nor 
the Morrow report felt competent to de- 
cide upon the necessary minimum num- 
ber of aircraft, the House Committee 
turned to the military for advice on this 
point and selected the 2,200 figure on the 
word of the Secretary of War. 16 

Throughout the twenties, the most en- 
thusiastic advocates of air power pro- 



13 House Rpt 700, 69th Cong, 1st sess, on H.R. 
10837. 

16 Ibid., SW to Chairman, House Military Affairs 
Com, March 2, 1936. 



tested against War Department unfriend- 
liness toward the air arm. Had the charge 
been entirely true, the Department would 
certainly never have sought to preserve 
the Lassiter program, since the conven- 
iently vague Morrow report provided an 
easy way to escape responsibility for a 
drastic cut in the Lassiter recommenda- 
tion. The 2,200 figure offered by the Sec- 
retary of War was far more vulnerable 
for a reason virtually ignored by the air 
power advocates. The 2,200 aircraft au- 
thorization nas premised upon the troops 
available within the statutory limits on 
the Army rather than upon a survey of 
requirements based on the strategic and 
tactical potential of the air weapon with- 
out reference to the size of the Army. By 
deciding upon the number of troops and 
then determining how many aircraft this 
number of men could maintain, General 
Staff planners made the tail wag the dog. 
It was as if the Navy had decided on the 
number of carriers it should have by 
building enough to use up the men left 
over after the destroyers and cruisers were 
provided with crews. 

The House and Senate debated the Air 
Corps bill at length and with great care, 17 
but neither made extensive changes in 
the committee draft except in the mat- 
ter of procurement procedures. 18 One 
change, however, although explained on 
the floor of the House as a simple techni- 
cality, was to have far-reaching effects. 



17 For the principal debates see Cong Red, 6gth 
Cong, 1st sess, pp. 8750-67, 10401-03, 10486, 11982, 
12254, 12268-73, as well as Senate Rpt 830 and 
House Rpt 1527. For a full record of the debate, 
see history of bill under H.R. 10827 in index volume 
for 69th Congress, 1st session. 

18 F or the c hanges in procurement procedures, see 
below jch. v7| 



CONGRESS AND THE AIR ARM 



49 



Since the clause authorizing 2,200 air- 
craft included 400 aircraft "on order," 
the House accepted without debate a re- 
quest to amend the total to 1,800 aircraft, 
removing all reference to those "on or- 
der" to avoid ambiguity in construction. 
From the record it seems clear that the 
legislators believed this adjustment in- 
troduced no vital change in the bill. 19 
The next ten years were to demonstrate 
how mistaken they were. 

In its final form, the Air Corps Act of 
2 July 1926 established a five-year pro- 
gram authorizing the Secretary of War 
to "equip and maintain a number not to 
exceed 1,800 serviceable airplanes." To 
maintain this level of strength the act 
further authorized the Secretary of War 
to replace obsolete or unserviceable air- 
craft from time to time, provided such 
replacements did not exceed approxi- 
mately 400 aircraft annually. The lan- 
guage of the act appeared mandatory in 
specifying that the increases above the 
prevailing level of strength were to be 
distributed over five years with an incre- 
ment of approximately one-fifth of the 
total number of aircraft procured in each 
year. 20 

Inasmuch as the first-line or standard 
aircraft on hand in the Air Service just 
before the passage of the act numbered 
only 184 (even including all aircraft pro- 
cured after the Armistice the figure rose 
to but 396), the restrictive language of 



19 Cong Red, May 3, 1926, p. 8757. For evidence 
that the aircraft "on order" should be in excess of 
the 1,800 ceiling, see testimony of the Chief of the 
Air Corps, in House Hearings on War Department 
appropriation for 1938, December 29, 1926, page 501. 

20 Air Corps Act of July 2, 1926 (44 Stat 780). See 
especially sec. 8. 



the legislation appears to be anomalous. 21 
By insisting upon a gradual increase to 
minimum strength over a five-year pe- 
riod, the legislators seemed to leave the 
nation with its defenses below the mini- 
mum they considered necessary for years 
to come. Neither economy nor a failure 
to appreciate the needs of defense dic- 
tated the restrictive provisions, however. 
They were deliberately inserted with the 
best of intentions. Were the Air Corps 
to procure the increase to full strength 
all at once (the difference between the 
1,800 authorized and those on hand, or 
some 1,400 to 1,600 aircraft), it would 
create a hump. Five years later, when 
all these aircraft became obsolete at the 
same time, the Air Corps would have to 
replace virtually the whole force, impos- 
ing an enormous load upon an industry 
vitally weakened by the lack of military 
contracts in the intervening years. 

The 1 ,800 Program in Operation 

The limitation on annual replacements 
to approximately 400 aircraft turned out 
to be unfortunate. Given a total of 1,800 
aircraft with a useful tactical life of ap- 
proximately five years before becoming 
obsolete or obsolescent, there should have 
been 360 replacements each year just to 
keep the force from obsolescence. 22 This 



21 Cong Red, May 5, 1926, p. 8758. The figures 
given are for March 1926. All aircraft in excess of 
the 396 postwar items were obsolete and eight or 
more years old, at best little more than junk. 

22 The 360 annual replacements are derived by 
dividing 1,800 by 5, the arbitrary life figure deter- 
mined by the Air Corps with the approval of the 
War Department. Actually, of course, the tactical 
utility of an aircraft is determined by the character 
of enemy equipment; thus, an aircraft could be ob- 
solete the day it came off the production line. The 



50 



BUYING AIRCRAFT 



left approximately 40 aircraft, or 2.2 per- 
cent of the total strength, to replace those 
aircraft dropped from the records each 
year by crashes resulting in a total loss. 
Since the average annual number of total 
wrecks over a five-year period amounted 
to 8.27 percent of the available force, the 
annual loss of aircraft through crashes ex- 
ceeded the number of replacements au- 
thorized over and above those procured 
to replace obsolete equipment. 23 On this 
account alone the Air Corps could never 
expect to reach the authorized strength 
of 1,800 aircraft unless it reduced the ac- 
cident rate to the vanishing point. Since 
the ratio of accidents to flying time was 
already exceptionally low, there was little 
likelihood of escape in this direction from 
the effects of the ceiling of 400 on replace- 
ments despite continual improvement in 
the accident ratio. 24 

There was yet another factor intrinsi- 
cally a part of the Air Corps Act that pre- 
vented attainment of the full number of 
aircraft authorized. Experience revealed 
that upward of 25 percent of the available 
aircraft strength was normally out of com- 
mission during years of peace. Some 15 
percent of the force was constantly un- 
dergoing overhaul at major repair de- 
pots while another 10 percent was often 
grounded temporarily at air stations for 
minor repairs or as a result of parts short- 
ages. 25 The number of aircraft actually 
available for tactical missions in an emer- 



five -year-life figure was an administrative conven- 
ience based more on past experience ivith regard to 
safe operation than on tactical utility, vis-a-vis a 
potential enemy. 

28 ACofAC to Exec OASW, 25 Feb 32, AHO Plans 
Div, 145.91-28. 

54 See, for example, Hearings on WD appropria- 
tion for fiscal year 1933, p. 995. 

55 Testimony of CofAC, in Hearings on WD ap- 



gency was thus only approximately 75 
percent of the strength annually reported 
to Congress. Since emergency conditions 
might reasonably be expected to increase 
the repair burden, not to mention opera- 
tional losses, the M-day strength of the 
Air Corps was considerably lower than 
it appeared to be on paper. 

The number of aircraft out of action 
for repairs could have been reduced 
sharply by substantial increases in main- 
tenance, labor, and expansion of depot 
facilities, but this would have involved 
large appropriations of a sort Congress 
was reluctant to make. This situation 
was accentuated by the fact that the large 
number of aircraft immobilized for re- 
pairs placed an extra strain on those re- 
maining in the field. The aircraft still 
operational would then require extra 
repairs, which increased the maintenance 
burden in the already overworked de- 
pots. 26 

One possible way out of the dilemma 
imposed by the restrictive legislation was 
to extend the life of all aircraft through 
administrative action. By keeping air- 
craft in an active status for more than 
five years before declaring them officially 
obsolete, it would be possible to increase 
the number of first-line aircraft on hand 
without exceeding the limitation on an- 
nual replacements. Although the dan- 
gerous implications in such a step were 
readily apparent, when faced with the 
budgetary limits of the early thirties the 
Air Corps decided to adopt this course 
in order to secure a larger force. 



propriation for fiscal year 1938, March 1937, p. 517. 
Air Corps testimony at appropriation hearings for 
other years gives figures varying only slightly from 
these. 

2e Ibid., pp. 517-1 8. 



CONGRESS AND THE AIR ARM 



51 



By arbitrarily declaring the life of all 
tactical aircraft to be seven years and of 
all training aircraft to be nine years be- 
fore classification as obsolete, the Air 
Corps was following a frugal but hazard- 
ous policy. 27 Commercial practice, as in- 
dicated by insurance write-down proce- 
dure, called for obsoletion after three 
years. 28 To be sure, the technical revolu- 
tion in the early thirties, with the transi- 
tion from wood, wire, and fabric con- 
struction to all-metal monocoque units, 
did actually lengthen the safe life span 
of aircraft. Nonetheless, it is highly sig- 
nificant that the reported practice of the 
Royal Air Force in 1937 was to write off 
all tactical aircraft as obsolete after two 
years. 29 

Experience over the years following 
1926 thus clearly demonstrated that the 
aircraft program set forth in the Air 
Corps Act was unworkable. Even if Con- 
gress had followed the act to the letter, 
providing approximately 400 replace- 
ment aircraft each year, it would never 
have been possible to reach a total of 
1,800 without arbitrarily extending the 
life of each aircraft beyond five years. 
Even then, had the 1,800 goal been 
reached, only about three-quarters of 
that number would actually have been 



" Memo, CofAC for ASW, 10 Sep 37, AHO Plans 
Div, 145.93-3(59. See also, Budget Officer to CofAC, 
17 Dec 38, WFCF 1940, 112.05, and Memo, ACofAC 
for Chief, Mat Div, 10 Apr 35, quoted in E. H. Speng- 
ler, Estimating Requirements for AAF Equipment, 
Supplies, and Spare Parts, WFHO, 1945, p. 3, AHO 
2802-2A. 

25 See L. L. Putnam, "Too Much Money or 'l oo 
Little . . .," Airway Age, Xll (May 2, 1931)' 4 8 4' 

29 The Economist, CXXVI (February 20, 1937), 401. 
It seems clear that RAF obsoletion policy was based 
on the high rate of performance change, which is to 
say tactical utility, rather than upon the "safe life" 
of the aircraft. 



tactically available. When the five-year 
program officially expired in 1931, the 
air arm, with a strength of 1,476 service- 
able aircraft, was not up to the minimum 
contemplated in the Air Corps Act. 30 
Understandably enough, Air Corps offi- 
cials began to urge a reopening of the 
aircraft program question. 

Agitation for Reconsideration 

The Chief of the Air Corps cast about 
for a means of relief. He first tried to 
secure an interpretation of the act that 
would remove the offending restrictions. 
The phraseology of the act provided for 
not more than 1,800 "serviceable" air- 
craft. By arbitrarily defining "service- 
able" as exclusive of those awaiting over- 
haul in depots, conservatively estimated 
to be 12.5 percent at all times, it was pos- 
sible to maintain that the true ceiling 
should be 2,058. The Judge Advocate 
General accepted this interpretation and 
the Attorney General subsequently 
handed down an opinion reaffirming it. 31 
But the House Appropriations Commit- 
tee felt otherwise. 

In preparing budget estimates for 1933 
the Air Corps went ahead on the assump- 
tion that 1,800 rather than 2,058 repre- 
sented the allowable ceiling. During the 
hearings that followed, an air arm spokes- 
man did mention the fresh interpretation, 
but the moment was inopportune, and 
the Appropriations Committee refused 
to accept the higher figure. This was 



30 Aircraft Year Book 1932, p. 76. 

31 36 Op Atty Gen 418, which mentions Army 
Judge Advocate General opinion of 11 January 1930. 
Abstract of former in 10 USCA sec. 292b, but Digest 
of Judge Advocate General of the Army Opinions, 
1914-40, inexplicably omits the latter opinion. 



52 



BUYING AIRCRAFT 



quite understandable, for a desperate and 
economy-minded Congress was under 
great pressure to put immediate retrench- 
ment ahead of potential defense regard- 
less of the fine-spun legalisms of the Judge 
Advocate General and the Attorney Gen- 
eral. 32 

Failing to escape via interpretation, the 
Chief of the Air Corps looked for another 
way out. 33 His proposed solution was a 
frontal assault on the act itself. To this 
end, he offered an amendment to elimi- 
nate the offending clauses. But the Gen- 
eral Staff rejected the plan to remove what 
it termed a "very wise limitation" with 
the comment, of dubious logic and rele- 
vancy, that the "advancement of commer- 
cial aviation" would render less necessary 
each year "the expenditure of increas- 
ing funds for replacement of Army air- 
planes." 3t Blocked in this attempt, the 
Air Corps chief waited a year before turn- 
ing to another line of assault. The Mor- 
row Board five-year program was set up 
only as an immediate goal in an era of 
^apid— development. The time had now 
arrived, the air arm leader asserted, for 
a complete reassessment of existing air- 
craft strength authorizations in the light 
of the most recent developments. 

After extensive studies made in con- 
junction with the War Plans Division 
(WPD) of the General Staff, the Air Corps 



33 Testimony o£ ASW (Air) F. T. Davison, January 
15, 193a, in House Hearings on WD appropriation 
for fiscal year 1933 and comments thereon by Repre- 
sentative Collins, pp. 1095-97, as weu " as testimony 
of CofAC, p. 993, giving testimony similar to that in 
the previous year's hearing, p. 681. See also, House 
Rpt 1215, 72d Cong, 1st sess, May 5, 1932, p. 15. 

33 ACof AC to Exec OASW, 25 Feb 32, AHO Plans 
Div, 145.91-28. 

34 Memo, CofS G-4 for DCofS, 5 Feb 32, AHO 
Plans Div 145.91-28. 



submitted a program of defense require- 
ments. 35 The planners considered such 
factors as the nation's geographic situa- 
tion, coast line, and critical areas, the air 
power of rival states, and the increasing 
vulnerability resulting from the extended 
range of aircraft. Here was a genuine at- 
tempt to derive aircraft requirements 
from the tactical and strategic situation 
of national defense and not, as hitherto, 
from some such consideration as the num- 
ber of ground troops available. More- 
over, the planning staff did not ignore the 
all-important premise on which require- 
ments computation existed: the air arm's 
strength in peace rests upon the assump- 
tion that it will be an M-day force suffi- 
ciently strong to provide adequate cover 
during the augmentation of skeletonized 
units of the Army to war strength. The 
Air Corps proposal visualized aircraft 
needs as centering upon four major areas 
—the continental United States and its 
three vital outposts, Panama, Hawaii, 
and the Philippines. To each of these 
areas the planners assigned aircraft in 
terms of the number of groups or squad- 
rons sufficient to provide the minimum 
force believed necessary. 

The staff planners' allocations of air- 
craft by functional types provide a reveal- 
ing measure of the evolving air power 
concept of the period. With bombard- 
ment groups receiving a larger share of 
strength than any other class, it is evident 
that the Air Corps had thrown off the 
shackles of close-support dogma that had 
characterized air arm policy ever since 
World War I. This apparent change in 
air power thinking should not, however, 
overshadow another and perhaps more 



35 ACofAC to AG, 15 Mar 33, WFCF 1940, 381. 



CONGRESS AND THE AIR ARM 



53 



surprising aspect of the proposed pro- 
gram. Although the Air Corps planners, 
working in conjunction with the General 
Staff, supposedly based the new statement 
of requirements upon a fresh reconsider- 
ation of all the elements of national de- 
fense, when the various groups and squad- 
rons were added up in terms of aircraft, 
the total amounted to approximately the 
same number provided in the act of 1926. 
Under the circumstances, it is difficult to 
escape the suspicion that the planners 
contrived their strategic requirements to 
coincide with the aircraft already author- 
ized, a case of cutting the pattern to suit 
the cloth on hand. 36 

Section nine of the Air Corps Act had 
established the office of Assistant Secre- 
tary of War for Air. So long as this office 
functioned, the Air Corps enjoyed a 
highly effective though informal channel 
of communication to the Secretary of 
War on matters of policy. When the 
Roosevelt administration came to power 
the Oflice of Assistant Secretary for Air 
was not filled and many of its functions 
reverted to the Chief of Staff. 37 This shift- 
ing of responsibility, coinciding with the 
aircraft requirements program, led the 
War Department to appoint a board of 
officers under the Deputy Chief of Staff, 
Maj. Gen. Hugh A. Drum, to undertake 
a comprehensive survey of the air arm. 38 

38 Since the number of aircraft assigned to different 
types of groups differed from time to time, it is im- 
possible to compute the exact number of aircraft in- 
volved in the Air Corps plan. 

37 Although usually attributed to an economy 
move, the decision not to fill the ASW (Air) office 
may have come in response to the vigorous exercise 
of prerogatives by the Chief of Staff, General Mac- 
Arthur. 

38 Testimony of Brig Gen Andrew Moses, in Com 
on Military Affairs, House, 74th Cong, 1st sess, Hear- 
ings on H.R. 7041, April 1935. 



The Drum Board 

The directive received by the Drum 
Board in August 1933 instructed the 
members to prepare plans for air opera- 
tions in conjunction with the "color 
plans" of the War Plans Division. 39 The 
board was instructed to accept the as- 
sumption that 1,800 aircraft were avail- 
able for assignment. This premise the 
board immediately rejected as unsound 
since 1,800 aircraft not only were not 
currently available but never would be 
so long as a considerable percentage of 
the force remained out of operation at 
all times for overhaul and repairs. To 
rest its study of requirements directly 
upon fundamentals, the board resolved 
to survey anew the whole question of 
defense requirements. 

The vital areas of national defense, de- 
cided the Drum Board, were the conti- 
nent itself and Panama and Hawaii, but 
not the Philippines, although the board 
recognized that air support for the latter 
would be considered, "should the na- 
tional policy ever change." As an M-day 
force, which would be required to defend 
these vital areas until the nation mobi- 
lized, it was assumed that the peacetime 
air arm should be at all times capable of 
a maximum effort. Exactly what this en- 
tailed, the board set out to determine. 

The Drum Board's formula for decid- 
ing upon the air strength necessary for 
the nation ran somewhat as follows: 



3S This paragraph and the several that follow con- 
cerning the Drum Board are based on the records of 
the board itself, including the report, exhibits, and 
related papers filed in AFCF 334-7 Drum Board. 
See bulky file, this reference. See also testimony of 
CofAC, in Hearings on WD appropriation, for fiscal 
year 1935, February 1934, p. 468. 



54 



BUYING AIRCRAFT 



Naval aviation should be equal to or 
greater than any anticipated enemy force. 
Air Corps units in the possessions should 
be "strong enough to meet a sudden 
emergency" and maintain themselves un- 
til reinforced. Observation or Army co- 
operation aircraft should exist in num- 
bers sufficient to equip all units to be 
mobilized on M-day. Finally, there 
should be a General Headquarters 
(GHQ) Air Force "of sufficient strength 
and composition" to "insure superiority 
in theaters where important air opera- 
tions are contemplated." The GHQ Air 
Force was conceived as a self-contained 
organization capable of strategic missions 
against the enemy's economy as well as 
operations in direct support of the ground 
arms. 40 

The Drum Board's analysis seemed to 
raise as many questions as it answered. 
What theaters of operations and what 
potential enemies did the board have in 
mind? The maximum coalition visual- 
ized by the Drum study consisted of the 
British Empire in alliance with Japan, a 
combination selected not on ideological 
grounds but only to envision the worst 
possible military situation. Another ques- 
tion raised by the Drum study concerned 
the curious contrast between the formula 
for aircraft strength suggested for the 
Navy's air arm and that proposed for the 
Air Corps. The Navy formula was sim- 
ple and clear-cut, growing easily out of 
the slogan "second to none." It was tan- 
gible, capable of reduction to relatively 



40 Wesley Frank Craven and James Lea Cate, eds., 
"The Army Air Forces in World War II," vol. I, 
Plans and Early Operations, January 1939 to August 
1942 (Chicago: The University of Chicago Press, 
1948), pp. 4 5 ff. 



exact numbers. The Air Corps formula, 
on the other hand, rested upon a vague 
series of ill-defined variables that made 
it difficult to derive a number so objec- 
tive and so matter of fact that it could 
not be easily challenged by a congres- 
sional committee. 

The Drum Board report recommended 
that the Air Corps be brought up to full 
strength with 1,800 aircraft, and that it 
not go beyond this figure if additional 
aircraft could be procured only at the 
expense of the other arms and services. 
However, the board did amend its con- 
clusions in two important respects. Rec- 
ognizing that the number of aircraft out 
for normal overhaul prevented the Air 
Corps from ever operating at full 
strength, the board favored the addition 
of an overhaul factor to the strength au- 
thorized by statute. At 12.5 percent of 
1,800, or 225 aircraft, this would bring 
the actual authorization to 2,025. The 
figure was still further increased to 2,320 
by the board's subsequent recommenda- 
tion of a 25 percent "war reserve" for 
certain tactical units that were expected 
to continue in operation during an emer- 
gency until reinforced by newly mobi- 
lized units. 41 

When the Drum report was filed in its 
final form late in 1933, the War Depart- 
ment had a new statement of require- 
ments supposedly based upon the very lat- 
est political and diplomatic situation. In 
precise figures the report called for 2,320 
aircraft, only a very few more than the 
number the Secretary of War had asked 
for when submitting a program to C011- 



41 Testimony of Cof AC, in Hearings on WD ap- 
propriation for fiscal year 1935, February 1934, pp. 



CONGRESS AND THE AIR ARM 



55 



gress before the passage of the 1926 legis- 
lation. Moreover, the 2,320 figure did 
not really constitute an increase but 
rather a readjustment of strength to en- 
sure a minimum of 1,800 tactically avail- 
able aircraft at all times, conforming to 
the original intent of the Air Corps Act 
and the five-year program. Once again, 
the evidence strongly suggests that the 
strategic requirements were drawn to fit 
the available force. 

The increase in the number of aircraft 
recommended by the Drum Board thus 
turned out to be no increase at all, only 
a proposal to bring the air arm up to the 
level authorized by Congress nine years 
earlier. And even this concession, the 
Chief of the Air Corps argued, was quite 
inadequate since the 12.5-percent over- 
haul factor allowed fell short of the 15- 
percent factor actually experienced in the 
field, to say nothing of aircraft inoper- 
able while grounded for station repair 
and because of local parts shortages. 42 
Nonetheless, even while grumbling at the 
report's shortcomings, Air Corps officers 
went ahead and planned procurement 
for the next fiscal year on the basis of 
the augmented program, 43 Whether War 
Department officials believed this aug- 
mentation was merely a clarification of 
the 1926 act requiring no new legislation 
or expected Congress to pass a new act 
to authorize the greater strength is not 
clear. The latter alternative seems un- 
likely since the Drum Board report was 
classified as secret and filed away, its ex- 
istence unknown to Congress, 



42 Ibid., p. 475. 

43 Acting Exec OCAC to Chief, Mat Div, 14 Tun 34 , 
and 1st Ind, Chief, Mat Div, to CofAC, 27 Jun 34, 
VVFCF 334.7 (1937). 



The 2,320 aircraft program was not des- 
tined to remain buried in General Staff 
files for long, however. Once again the 
air arm became the subject of political 
controversy involving investigations that 
dragged out the War Department's linen 
for public washing. In the course of the 
investigations during 1934, War Depart- 
ment officials revealed the existence of 
the Drum report in response to a con- 
gressional request for information, hut 
the details of the 2,320 program were not 
readily available to members of Congress 
until nearly a year later when published, 
and then only in part, in the report of a 
board headed by Newton D. Baker, a for- 
mer Secretary of War. This long delay 
in bringing the new program before Con- 
gress antagonized the chairman of the 
House Military Affairs Committee and 
led him to suspect the General Staff of 
seeking to stifle air arm growth. 44 It was 
just such suspicions that placed congress- 
men in the mood to launch an investiga- 
tion of the air arm. The airmail scandal 
provided Congress with a reason, and 
soon not one but several investigations 
were to probe the air arm. 45 

The Baker Board and the 
Howell Commission 

When it became evident that the Air 
Corps would be investigated by a num- 
ber of congressional groups, each sub- 
mitting different and perhaps conflicting 



** Comments of Representative J. J. McSwain, 
Chairman, Military Affairs Com, House, 74th Cong, 
1st sess, Hearings on H.R. 7041, April 1935, pp. 127, 
129-30. 

45 During the early thirties the Black, Nye, and 
Rogers investigations, to name but the more out- 
standing, all probed Air Corps policies at length. 



56 



BUYING AIRCRAFT 



recommendations, the Secretary of War 
decided to act. Following the traditional 
pattern of parrying congressional inves- 
tigators with Executive appointees, the 
Secretary beat Congress to the draw in 
April 1934 by establishing a board under 
chairmanship of former Secretary of War 
Baker to consider the Air Corps and na- 
tional defense in the broadest context. 
The board followed these instructions 
and submitted a report of great impor- 
tance to the Air Corps in many phases of 
its operations. Here only the recommen- 
dations concerning aircraft strength are 
pertinent. 46 

Inasmuch as General Drum served as 
a member of the Baker Board, it is no 
surprise to find that the new board ac- 
cepted the recommendations of the ear- 
lier Drum Board without challenge. "As 
a first objective," the Baker report asked 
for 2,320 aircraft, "the minimum con- 
sidered necessary to meet . . . peace-time 
Army requirements." While recognizing 
that further studies might reveal the need 
for increases beyond the 2,320 figure, the 
Baker Board followed the Drum Board in 
declaring that such increases were not to 
be accomplished at the expense of the rest 
of the Military Establishment. 47 Since a 
majority of the Baker Board were men 
who, on the record, were not enthusias- 
tic advocates of air power, this relatively 
modest recommendation for increase in 
strength could scarcely have been unex- 
pected by the Air Corps, but the air power 
enthusiasts had another string to their 
bow. 48 



46 See below, for example, |p. 159, n. 18. | 

47 Baker Board Rpt, pp. 31, 67. 

48 Of the five officers on the Baker Board, only one 



Under the terms of the Air Mail Act 
passed in June 1934, the President was 
authorized to appoint a committee to 
study the whole question of aviation in 
the United States. He did so early in 
July. Officially designated the Federal 
Aviation Commission, the group was 
popularly known as the Howell Com- 
mission after its chairman, Clark Howell, 
distinguished editor of the Atlanta Con- 
stitution and a longtime Democratic Na- 
tional Committeeman. 49 Those who ad- 
vocated radical increases in air strength 
may have pinned their hopes upon this 
body, for the Howell Commission began 
its five months of deliberation just two 
weeks before the Baker Board made its 
final report. They were doomed to dis- 
appointment. Significant as many of the 
Howell recommendations may have been, 
insofar as they touched on air strength, 
the commission accepted without ques- 
tion the findings presented by the Drum 
Board and reiterated by the Baker Board. 
The proposed 2,320 program was ac- 
cepted as a "working basis," qualified 
only by the proviso that changing world 
conditions might again reopen the ques- 
tion. 50 

Had it wished to do so, the Howell 
Commission may not have been able to 
differ with the Drum and Baker conclu- 
sions. Covering the whole field of avia- 
tion and restricted as to funds and time, 



was an air officer. Of the six civilians, all supposedly 
chosen for their professional association with air 
matters, two, Edgar H. Gorrell and Baker, were 
clearly on the record as seeing the air power prob- 
lem through General Staff eyes. This would appear 
to leave the board six to five in favor of a conserva- 
tive solution for the air arm question. 

49 S Doc 15, 74th Cong, 1st sess, Rpt of the Federal 
Aviation Comm, January 22, 1935. 

50 Ibid., p. la 1. 



CONGRESS AND THE AIR ARM 



57 



the commission almost necessarily had to 
decide not to duplicate the work of the 
earlier board. Moreover, the General 
Staff made it quite clear that the commis- 
sion would do well not to meddle with 
the Baker findings. A request for mili- 
tary witnesses to appear before the com- 
mission was brushed off with the com- 
ment that the officers were too busy and 
would remain so for one or two months. 
And, unless the commission was willing 
to accept the Baker Board report as it 
stood, the Secretary of War declared that 
it would be necessary to present in closed 
session "considerations that must govern 
those responsible for the national defense 
but which cannot be made public." 51 
Confronted with broad hints of War De- 
partment hostility toward reconsidera- 
tion of the air power question, the 
Howell Commission skirted the issue by 
accepting the Baker report strength fig- 
ures. 

Even if the Howell group had been 
aggressively determined to explore the 
question of air arm strength from fresh 
evidence, there is good reason to doubt 
that much would have been accomplished 
in gathering advice from officers in the 
branch involved. While the commission 
hearings were taking place, the War Plans 
Division circularized instructions to the 
entire Army for the guidance of all called 
to testify. Officers were directed to fa- 
miliarize themselves with "approved War 
Department policy on each of the subjects 
discussed" and to "conform to these prin- 
ciples" when giving testimony. If called 
upon for individual, unofficial opinions, 
officers were authorized to express their 



51 SW to Federal Aviation Comm. 31 Aug 34, 
mimeograph copy, WFCF 1935, 334.8. 



private views provided they were clearly 
identified as such. 52 Experience in nu- 
merous earlier public hearings had effec- 
tively demonstrated that most officers 
would be extremely reluctant to express 
privately held views that were markedly 
at variance with the positions officially 
held by their superiors, even when spe- 
cifically authorized to do so. 53 

The frontal approach to the ear of Con- 
gress was closed or at least made danger- 
ous, and individual officers would not 
attempt flanking tactics by carrying their 
views and proposals to congressmen pri- 
vately. War Department directives had 
also covered the flanks: 

"No officer will officially, or otherwise, 
transmit to any person or agency out- 
side of the War Department, other than 
through the prescribed channels, any rec- 
ommendations relative to the introduc- 
tion, amendment or enactment of mili- 
tary legislation general in scope, or any 
information intended to be used in the 
formulation or consideration of such leg- 
islation . . . unless specifically authorized 
by the Secretary of War." 54 Nor was this 
regulation a dead letter. When the Chief 
of Staff, General Craig, suspected Air 
Corps officers of political activity, he 
urged the Chief of the Air Corps to locate 
the offenders. The latter admonished 
his officers, saying, "Expressions of per- 



i2 Memo, WPD for All General Staff Divs, Arms, 
Services, etc., 11 Sep 34, WFCF 1935, 334.8. 

53 Support for this contention is abundantly clear 
throughout the Lampert and Morrow Hearings. 
Lampert, pp. 1682-83, 1574-76, Morrow, pp. 569-70, 
593-633; especially pp. 617-18. 

54 TAG to Chiefs of Arms, Services, et al. r 20 Feb 
31, quoted in full in Appendix XII of MS, The 
Army and Congress, 1949, a study of Legislative and 
Liaison Div SSUSA by Lt Col R. E. Jackson, Jr. Sec 
also, G-i to CofS, 13 Jul 38. 



58 



BUYING AIRCRAFT 



sonal opinion which are at variance with 
War Department plans and policies, 
when stated to persons outside the mili- 
tary service, may result in building up 
opposition within Congress to construc- 
tive measures or appropriations recom- 
mended by the responsible authori- 
ties." 55 Only the official view must reach 
Congress. 

While on the one hand War Depart- 
ment regulations and directives of one 
sort or another sought to ensure that no 
opinions of contradictory character 
reached Congress from individual offi- 
cers, the Department was elsewhere en- 
gaged in setting up machinery to facili- 
tate the flow of official views toward the 
Hill. Although it was common practice 
for the War Department to maintain 
liaison officers with the Senate and House 
committees, in the early thirties none 
served with the House because of a tem- 
porary dispute over jurisdiction. Possi- 
bly as a way round this dispute, the Chief 
of Staff's office had designated several offi- 
cers to "cultivate" congressmen in order 
to have contacts well placed to advise on 
the merits or faults of pending legisla- 
tion. A number of officers were so em- 
ployed "with excellent results." 56 

A free flow of ideas from the War De- 
partment to Congress held high promise 
of mutual advantage. But in facilitating 
the flow of official views while inhibiting 
if not preventing the expression of ideas 
and opinions from individual officers, the 



55 Actg CofAC to All Concerned [throughout Air 
Corps], 6 Nov 35, AFCF 321.9A Organization. See 
also buck slip, O.W. [CofAC, Maj Gen Oscar West- 
over] to Gen Craig, 26 May 36, same file. 

56 See MS, Evolution of the Legislative Branch 
(Legislative and Liaison Br, OCofS, photostat copy 
covering period 1902-37). 



War Department may have deprived Con- 
gress of free access to the fullest range of 
data available. 57 

The Baker and Howell groups ac- 
cepted the Drum report plan for 2,320 
aircraft program as it stood. Both rubber- 
stamped the Drum program without any 
pretense of going behind the staff studies 
upon which the program rested. For this 
reason, criticisms of the proposed pro- 
gram might equally well be directed at 
the investigators' lack of initiative as at 
War Department efforts to control the 
evidence presented to them. However, 
the Baker and Howell groups were of 
significance in the question of air arm 
strength. Their reports were most use- 
ful. They brought the Drum study out 
of its secret classification in War Depart- 
ment files and set up the 2,320 aircraft 
program as a target figure for public dis- 
cussion, an action without which author- 
izing legislation was scarcely expected 
from Congress. 

A New Target: 2,320 

A few months after the Baker Board 
submitted its report in July 1934, the 
chairman of the House Subcommittee on 
War Department Appropriations wrote 
the Secretary of War asking what had 



57 That many congressmen were willing and even 
anxious to hear individual officers express views at 
variance with the official War Department position 
is indicated by remarks sprinkled throughout the 
budget hearings and verbatim transcripts of the in- 
vestigations mentioned above. For a formal state- 
ment see W. F. James, Chairman, House Military 
Affairs Com, lecture before Army War College, 16 
Jun 27, WF, CADO, Aco 3/75. Particularly reveal- 
ing are the concluding remarks of the commandant 
of the college who begged the congressman to ask 
questions at hearings: "Information often never gets 
to Congress unless Congress pulls it out of us." 



CONGRESS AND THE AIR ARM 



59 



been done by administrative action to 
fulfill the board's recommendations and 
what legislative action would be re- 
quired. 58 In addition to demonstrating 
the initiative and interest of Congress, 
this request reflected the importance and 
prestige attached by members of Con- 
gress to such civilian or civilian-influ- 
enced bodies as the Baker and Howell 
groups. This respect for special civilian 
boards was by no means an isolated case. 59 
When considering the question of air- 
craft strength, some congressmen not only 
showed a willingness to accept the recom- 
mendations of the boards but to favor 
even more generous increases in strength. 

Unfortunately for the Air Corps, the 
first bills introduced in Congress to im- 
plement the increase proposed by the 
Baker and Howell groups died in com- 
mittee. Two factors may have contrib- 
uted to this fate. The first session of the 
Seventy-fourth Congress— January to Au- 
gust 1935— was considerably exercised 
over alleged profiteering in aircraft con- 
tracts, and on this score alone the time 
was scarcely propitious for special legis- 
lation to augment the air arm. Moreover, 
one of the more extensively considered 
bills, calling for 4,834 Army aircraft, cou- 
pled the increase with a controversial plan 
to establish a Department of -Air. 60 The 



58 Chairman, House Subcom on WD Appropria- 
tion, to SW, December 7, 1934, cited in House Hear- 
ings on WD appropriation bill for fiscal year 1936, 
P- 49- 

59 See, for example, remarks of Representative 
Dockweiler, a member of the War Department ap- 
propriation subcommittee, who urged compliance 
with the Baker Board recommendations, erroneously 
describing the board as "entirely civilian," hence not 
"militaristic," Cong Red, February 11, 1936, p. 1819. 

00 H.R. 7041, introduced by Representative Mc- 
Swain, Chairman, Com on Military Affairs, House. 



proposed increase dropped from sight 
when the more elaborate departmental 
proposition did not emerge from com- 
mittee. 

Balked in his first attempt to imple- 
ment the proposed increase in air 
strength, the chairman of the House 
Military Affairs Committee, Representa- 
tive J. J. McSwain of South Carolina, 
dropped another bill into the congres- 
sional hopper soon after the next session 
began in 1936. This time he tried a new 
line of attack. The Air Corps Act of 
1926, he said, authorized 1,800 aircraft 
for the Army and 1,000 for the Navy, a 
ratio of g to 5. Since that time Congress 
had increased the Navy's authorization to 
2,190. If the original ratio were to be 
preserved, then the Air Corps should 
have 4,000 aircraft. 65 Representative 
McSwain justified this 40-percent increase 
over the 2,320 figure recommended in the 
Baker report by pointing out that prog- 
ress had been rapid in aviation since the 
Baker Board convened, and some Euro- 
pean powers were reputed to have be- 
tween 5,000 and 10,000 military air- 
craft. 62 The House passed the McSwain 
bill calling for 4,000 aircraft in five years 
and sent it to the Senate, where the meas- 
ure was referred to the War Department 
for comment. 

In reply, the Secretary of War wrote 
that the 2,320 aircraft favored by the 
Drum and Baker Boards constituted the 
minimum safe peacetime strength. Since 



Text in full in Hearings on the bill, 74th Cong, 1st 
sess, April 1935. 

91 Cong Red, February 13, 1936, p. 1992. The Mc- 
Swain bill was H.R. 11140. 

92 House Rpt 2230, 74th Cong, ad sess, March 24, 
1936, p. 2230. 



60 



BUYING AIRCRAFT 




Chairman McSwain presiding at a mee 
Military Affairs, 1935. 

the world situation was growing worse, 
the need for increases over this figure was 
"more imminent than remote." There- 
fore the War Department felt that the 
proposed ceiling of 4,000 aircraft would 
not be excessive; a flexible, open-end, un- 
limited authorization might even be pref- 
erable. Nevertheless, despite this will- 
ingness to accept increases in air strength, 
the Secretary informed the Senate that 
the War Department could not favor the 
McSwain bill since it was "not in accord 
with the financial program of the Presi- 
dent." The Bureau of the Budget, speak- 
ing for the Chief Executive, had written 
the War Department that only 2,320 air- 



g of House of Representatives Committee on 

craft, without limit as to time, would be 
approved by the President.* 53 

Under a long-standing rule of the Bu- 
reau of the Budget, the various depart- 
ment heads were forbidden to foster leg- 
islation involving expenditure without 
first securing Presidential approval. 64 
This common sense ruling sought to pro- 
tect the Executive budget by preventing 

63 SW to Senator Morris Sheppard, Chairman, Sen- 
ate Military Affairs Com, May 26, 1936, quoted in 
full in Senate Rpt 2131, 74th Cong, ad sess, May 12, 
'93 6 - 

64 Bureau of the Budget Circular No. 49, 19 Dec 
qi, quoted in full in Willoughby, National Budget 
System, pp. 65-66. Reissued periodically in the years 
following 1931. 



CONGRESS AND THE AIR ARM 



61 



end-run Treasury raids, un-co-ordinated 
legislation backed by heads of depart- 
ments to the detriment of the compre- 
hensive, integrated Presidential fiscal pro- 
gram. As a financial measure the system 
was undoubtedly sound. Here, however, 
fiscal considerations obtruded upon pro- 
fessional military opinion. Because it 
was not immediately expedient from a 
fiscal point of view, the President was re- 
jecting a bill designed to provide long- 
term authorization of aircraft for national 
defense. The consequences of this cir- 
cumstance were in all probability unrec- 
ognized at the time, but they were serious. 

Two alternatives confronted the Sen- 
ate Military Affairs Committee. One 
called for 4,000 aircraft in five years; the 
other called for 2,320 aircraft without 
time limit. The committee settled the 
matter by reporting out a bill authorizing 
2,320 "immediately." 65 This bill passed 
the Senate. When the Senate and House 
conferees met to resolve their separate 
bills, they compromised on 2,320 aircraft, 
making no mention of the time limit. In 
this form the bill passed both houses and 
became law. 66 

The 2,320 Act 

The bills reported out after detailed 
consideration by the House and Senate 
Military Affairs Committees both con- 
tained careful provision for a time limit. 
Without such a time specification the au- 
thorization might mean virtually noth- 
ing. Experience under the Air Corps 



65 Senate Rpt 2131, 74th Cong, sd sess, May 12, 
1936- 

66 House Rpt 2994, 74th Cong, 2d sess, June 15, 
1936, and floor discussion, Cong Red, June 19, 1936, 
p. 10217. 



Act of 1926 had shown that even where 
a time clause had been inserted, the funds 
might not be forthcoming. Where the 
time factor was omitted there would be 
still less leverage, less positive assertion 
of "the will of Congress," with which to 
persuade the Bureau of the Budget and 
the appropriations committees of the ne- 
cessity to provide funds to procure the 
full number of aircraft authorized. De- 
spite this obvious record of past experi- 
ence, the bills' conferees dropped the time 
clauses in their efforts to reach an accept- 
able compromise. Legislative mechan- 
ics, the hasty compromise of the con- 
ferees, intruded upon the clear intent of 
the bills as originally framed. 

The 2,320 act, as approved by the Pres- 
ident on 24 June 1936, authorized aug- 
mentation in the strength of the Air 
Corps above the 1,800 figure established 
in 1926. The language of the act, subse- 
quently a matter of dispute, stipulated 
that the increase authorized should not 
exceed 2,320 aircraft. 67 This figure re- 
mained the official ceiling on the size of 
the air arm until 1939, when the rush of 
events once more forced a reopening of 
the question. 

It is difficult to determine whether 
Congress established a peacetime air 
strength in the 2,320 ceiling that the 
War Department considered adequate. 
The Secretary of War flatly asserted on 
the public record in 1937 that 2,320 air- 
craft were "sufficient for our needs." At 



B7 4g Stat 755, June 24, 1936. Although an authori- 
zation of 2,320 aircraft in lieu of the 1,800 prescribed 
in the Air Corps Act of 1926 was the clear intent of 
the 1936 statute, the language used in the act actu- 
ally allows for an alternative interpretation in which 
the 2,320 aircraft are considered to be in addition 
to the 1,800 already authorized. 



62 



BUYING AIRCRAFT 



the same time he admitted that peace- 
time strength should approximate "rather 
closely" the requirements for war. 68 A 
year later the Chief of Staff called the 
2,320 program "adequate," although sub- 
ject to revision as world conditions 
changed. 69 At the same time, when a 
congressman asked the Chief of the Air 
Corps if the 2,320 program would pro- 
vide "all justifiable advance preparation" 
for a defensive war, the Chief of the Air 
Corps replied that the program offered 
"a proper minimum force." 70 Here were 
public assurances from highly placed of- 
ficials on the adequacy of the 2,320 pro- 
gram. These assurances are hard to rec- 
oncile with statements made elsewhere. 

There is reason to believe that the 
Chief of the Air Corps described the 
Baker Board's 2,320 program as "a proper 
minimum force" only in deference to the 
budget program and not from conviction. 
Three years earlier, soon after the Baker 
report appeared, the Air Corps had offi- 
cially protested to the General Staff that 
the 2,320 program was inadequate. 71 Cer- 
tainly nothing had occurred on the inter- 
national scene after that date to reduce 
the requirement. In a similar vein, there 
appears to be a discrepancy in the public 
statements coming from the Office of the 
Secretary of War. In his 1937 report the 
Secretary declared that the 2,320 aircraft 
program was not only sufficient but ap- 
proximately equal to war needs. Yet only 
about a year earlier, his predecessor had 
officially informed Congress that the need 



88 Annual Report of the Secretary of War, 1937, 
P-5- 

69 Testimony at Hearings on WD appropriation 
for fiscal year 1939, February 1938, pp. 10, 34. 

70 Ibid., p. 438. 

71 CofAC to TAG, 1 Nov 34, AFCF 335.5 Baker. 



for increases over 2,320 was "more immi- 
nent than remote," saying that he would 
have urged an authorization of 4,000 or 
more aircraft were it not for budgetary 
curbs. 72 If Congress at times seemed con- 
fused in handling military legislation 
during the between-war decades, the mili- 
tary authorities were certainly partly re- 
sponsible. 

An Evaluation 

The question of how many aircraft 
should be authorized for national defense 
resolves itself into two other questions: 
Who shall determine how many? How 
shall that figure be determined? To the 
first the answer is clear. The Constitu- 
tion gives Congress the job. But inevi- 
tably Congress must rely upon the profes- 
sionals, the military experts, for detailed 
advice. 73 The military experts were quite 
willing to give advice, declaring that it 
was not a difficult problem for a trained 
general staff to determine the force 
needed to ensure success. 74 Since Con- 
gress showed itself after 1933 generally 
anxious to give the air arm adequate and 
even generous support, any inadequacies 



72 See Senate Rpt 2131, 74th Cong, 2d sess, May 12, 
1936. 

7 * Far from seeking to take such decisions from 
Congress, responsible officers urged Congress to take 
an emphatic stand on such questions as over-all 
strength. See, for example, testimony of General 
MacArthur at Senate Hearings on WD appropria- 
tion for fiscal year 1936, 27 Feb 35, pp. 4-6. While 
willing to give advice, military officials were usually 
anxious to have Congress make the decisions. In 
the absence of clear and emphatic policy decisions, 
legislation by appropriation became unavoidable. 
See also, Elias Huzar, "Congress and the Army: Ap- 
propriations," American Political Science Review, 
XXXVII (August 1943), 673. 

74 Baker Board Rpt, p. 11. See also, SW to Fed- 
eral Aviation Comm, 3 Aug 34, WFCF 1935, 334 8. 



CONGRESS AND THE AIR ARM 



63 



in the strength authorized would appear 
to be the responsibility of the Air Corps 
and the War Department rather than of 
Congress. 

The evidence available indicates that 
the failure of the air arm to present its 
best case to Congress arose in part from 
the position of the Air Corps within the 
War Department. While the General 
Staff actually did treat the Air Corps as 
a favored child, it was repeatedly asserted 
that advances in air strength were desir- 
able but not advisable if such gains could 
only be made at the expense of the other 
arms and services, which always lingered 
perilously near and sometimes below 7 the 
starvation level. Thus the revision of 
air arm needs reaching Congress was al- 
ways tempered by the thoroughly under- 
standable desire of the General Staff to 
ensure equitable recognition for all its 
arms and services. Since the Constitu- 
tion gives Congress the task of deciding 
on questions of military strength and 
Congress relies on the military experts, 
it would appear to be a clear obligation 
of Congress to ensure for itself the fullest 
presentation of the pleas of every claim- 
ant agency. 75 

In the final analysis it is clear that Con- 
gress, the General Staff, and the Air Corps, 
not to mention the President and the Bu- 
reau of the Budget, must share the re- 
sponsibility for determining the air 
strength of the nation. In one way or an- 
other all must bear some measure of re- 
sponsibility for the size of the air arm 



75 Some congressmen saw the issue clearly and sub- 
mitted bills for a separate air force as the only rem- 
edy. However, the separate air force question is so 
tangled with other issues and motives that it is im- 
possible to single out any one bill as an effort pri- 
marily intended to exploit air power to the utmost. 



actually on hand when the nation finally 
entered World War II. The subsequent 
efforts of the politicians and of the officers 
each to transfer this responsibility to the 
other were entirely unjustified as the rec- 
ord clearly shows. But the issue of who 
should determine air strength w T as only 
the first half of the problem. Just how 
the necessary number of aircraft should 
be determined posed an equally vexing 
problem. 

A uthorizations, Appropriations, 
and Aircraft 

If air power advocates were disap- 
pointed with the number of aircraft au- 
thorized by Congress during the years 
between wars, they were even less satis- 
fied with the number they actually re- 
ceived. That the funds appropriated were 
never sufficient to bring the air arm up 
to authorized strength is immediately 
evident from the record. Just why this 
was the case is somewhat more difficult 
to perceive. For this reason, an analysis 
of congressional appropriations for air- 
craft in the twenties and thirties may be 
useful. 

Air Strength in the Booming Twenties 

After the confusion of the early twen- 
ties, the Air Corps Act of 1926 promised 
to usher in a new and orderly era by au- 
thorizing a minimum force of 1,800 air- 
craft to be acquired in five annual incre- 
ments beginning in 1926. Since the act 
was passed in July, after the current fiscal 
year had begun, a supplemental appro- 
priation was required to finance procure- 
ment of the first increment. The act it- 
self actually called for a supplemental es- 



64 



BUYING AIRCRAFT 



timate, but Congress adjourned without 
appropriating the necessary funds. Thus 
congressional inaction delayed the begin- 
ning of the five-year program by a full 
twelve months. Furthermore when air 
officers subsequently presented their esti- 
mates for fiscal year 1928, they asked for 
94 fewer aircraft than the number origi- 
nally specified for the first increment of 
the program. Under congressional prod- 
ding, the airmen revealed that the Bureau 
of the Budget had compelled this reduc- 
tion. 

Still other factors tended to subvert the 
intent of Congress. The sudden expan- 
sion imposed by the Air Corps Act of 
1926 disrupted the normal operation of 
the air arm. An increase in the total 
number of aircraft involved a commen- 
surate increase in trained personnel. To 
secure trained crews, the Air Corps had 
to break up tactical units in order to find 
men to run its expanded training schools. 
This created a greater demand for train- 
ing aircraft and a temporarily diminished 
requirement for tactical types. For this 
reason, when the Bureau of the Budget 
imposed limitations on the air arm esti- 
mates it was the tactical aircraft that suf- 
fered. From the 94 aircraft in the first 
increment selected for elimination by Air 
Corps officers, 65 were bombers and 20 
were attack aircraft. 76 

When the Air Corps presented esti- 
mates for the second increment of the 
five-year program in the budget for fiscal 
year 1929, Congress appeared to be in a 
mood to deal generously. The House 
Appropriations Committee considered 
the program one of the primary objec- 



76 House Hearings on WD appropriation for 1928, 
December ag, 1926, pp. 498, 506. 



tives of the Military Establishment and 
drafted a bill to provide more than 
enough aircraft to complete the second 
increment. This supposedly more-than- 
adequate treatment was deceptive. The 
45 aircraft over and above the second in- 
crement quota did not make up the defi- 
ciency suffered during the previous year. 
Moreover, the second increment repre- 
sented quantity and not quality. To keep 
the tax bill low and still meet the pro- 
gram target in terms of numbers of air- 
craft, the appropriations committeemen 
decided to procure some 27 fewer bomb- 
ers than the original program called for, 
substituting in their stead a larger num- 
ber of less expensive units, including 150 
observation aircraft of a design already 
obsolescent. 77 

Justification for the procurement of 
obsolescent aircraft rested on a bald ap- 
peal to economy and nothing more. The 
Air Corps had on hand several thousand 
Liberty engines that could be used in con- 
junction with the obsolescent observa- 
tion airplanes. To refurbish each of 
these ten-year-old power plants required 
an expenditure of but $700, whereas each 
new engine purchased would cost ap- 
proximately $7,000. War Department 
spokesmen made it abundantly clear that 
they considered procurement of less ex- 
pensive and obsolescent aircraft types a 
dubious expedient at best, but the con- 
gressmen persisted in their course. 78 
Even so, as a general rule Congress 
treated the air arm as a favored child 



77 House Rpt 497, 70th Cong, 1st sess, January 31, 
1928, pp. 6-13. 

78 Ibid. See also, testimony of ASW (Air) Davison, 
January 6, 1928, House Hearings on WD appropria- 
tion for 1929, pp. 449, 464. 



CONGRESS AND THE AIR ARM 



65 



among the arms and services. 78 Favored 
or not, when the boom years ended, the 
Air Corps had not yet reached the mini- 
mum strength in aircraft authorized by 
Congress in the summer of 1926. If the 
boom years failed to build up the na- 
tion's air defense, the depression years 
were to prove little more successful. 

Air Strength in the Depression Years 

Even when the depression led to a 
clamor for economy in federal expendi- 
tures, congressmen continued to speak 
favorably of strengthening the nation's 
air defense. But speaking favorably 
about the aircraft program and appro- 
priating money for it were two entirely 
different propositions. Thus in January 
1930, when reporting out the War De- 
partment appropriation bill, the House 
committee proudly noted that the meas- 
ure provided funds for the full fourth 
increment of the five-year program. As 
had been so frequently the case, the "full 
increment" was achieved only by resort- 
ing to a maldistribution of types. While 
the total number of aircraft procured was 
up to schedule, there were serious short- 
ages among the combat types specified in 
the program. 

The Appropriations Committee tried 
to avoid the onus of providing less than 
the program called for by undermining 
the very premise of the program itself: 

The Five Year Program is not a hard fast 
schedule which must be adhered to rigidly. 
It is nothing more than an authorization . . ., 



79 For examples of Senate and House efforts to 
make up program deficiencies, see Senate Rpt 381, 
70th Cong, 1st sess, February 24, 1928; House Rpt 
850, 70th Cong, 1st sess, March 7, 1928; Senate Rpt 
1 565, 70th Cong, 2d sess, January 28, 1929. 



subject, of course, to considerations and 
eventualities that could not be foreseen 
when the program was adopted. It would 
be a mistake to expect or require strict ad- 
herence to a procurement program for a 
product so unstable that obsolescence oc- 
curs between order and delivery dates. Pro- 
curements are so nearly in accord with the 
program that there is no room for com- 
plaint. 80 

The same committee that declared au- 
thorizations were little more than sugges- 
tions to be accepted or ignored at will 
had only a year before asserted precisely 
the contrary. To justify a heavy appro- 
priation covering aircraft procurement to 
meet the authorized program, the com- 
mittee had then argued that the expen- 
ditures could not be avoided "without 
disregarding the law." 81 

Something of the contradiction inher- 
ent in reporting out a bill providing for 
a "full increment" and then admitting 
that the aircraft to be procured were not 
the proper types was repeated in 1931. 
The House Appropriations Committee 
reported a measure that provided for the 
last increment of the five-year program, 
bringing it nearly to the verge of com- 
pletion with the number of aircraft on 
hand and on order falling only 66 short 
of the authorized goal of 1,800 units. 82 
But the committee's report did not men- 
tion that the final increment finishing 
the five-year program was a full year 
after the originally contemplated termi- 
nal date. When the five-year program 
was formulated in 1926, it was the clear 



80 House Rpt 97, 71st Cong, 2d sess, January 6, 

!930. PP- 13-M- 

81 House Rpt 1991, 70th Cong, 2d sess, January g, 

l 9 2 9> P- 3- 

82 House Rpt 2179, 71st Cong, 3d sess, January 5, 
193 1 - PP- 3- 1 «" 1 3- 



66 



BUYING AIRCRAFT 



intent of all that the question should be 
thrown open for reconsideration and re- 
vision after the five years had elapsed. 
The five years slipped by, but Congress 
did not attempt to determine anew 
whether the authorized ceiling of 1,800 
aircraft was adequate. 

There was a second discrepancy in the 
committee's report on the appropriation 
measure for fiscal year 1932. By suggest- 
ing that the five-year program would be 
nearly finished in 1932, since aircraft "on 
order and on hand" would total almost 
1,800, the committee denied the whole 
conception of the program as it was un- 
derstood in 1926. The original program 
set a target of 2,200 aircraft of which 400 
were to be "on order." In the money 
bill for fiscal year 1932 this was reduced 
to 1,800 exclusive of those on order, and 
was interpreted to mean the program was 
finished when the 1,800 total included 
those on order. 

By the winter of 1933-34, at the very 
bottom of the depression, the pressure 
for economy led Congress to abandon all 
attempts at immediate completion of the 
five-year program. The evident condi- 
tion of the Treasury took precedence 
over the potential requirements for na- 
tional defense. Although the congress- 
men had been continually reasserting 
their desire to favor the aircraft program, 
the dictates of economy proved more po- 
tent. 83 As a consequence, the rate of at- 
trition exceeded the rate of replacement. 
Where the Air Corps planned to procure 
370 aircraft for fiscal year 1934, economy 
cuts actually left them only 17 units. In 



83 House Rpt 1215, 72c! Cong, ist sess, May 5, 193a, 
pp. s-4, 1511; House Rpt 1855, 7 2< 1 Cong, 2d sess, 
January 12, 1933, p. 14. 



the face of such crippling reductions, the 
Chief of Staff, General MacArthur, ap- 
peared before an Appropriations Sub- 
committee to protest that the nation's 
defense had been dangerously impaired. 
He advocated appropriations to complete 
the five-year program without delay. 84 

General MacArthur was only reiterat- 
ing what War Department spokesmen had 
said all along: the 1,800 program was a 
minimum necessity. Cuts below author- 
ized strength not only resulted in fewer 
aircraft on hand but hurt the nation's 
future air defense as well, for a reduction 
in training aircraft during the depression 
resulted in a smaller reserve of trained 
men from which to expand in an emer- 
gency. Even if a miracle of mass produc- 
tion should provide more than enough 
aircraft in a future crisis, there w T ould be 
great difficulty in expanding the training 
program fast enough from the minute 
resources available as a result of the de- 
pression cutback in aircraft. 85 More- 
over, a failure to procure the program 
quota in any one year could not be made 
up by increased procurement the follow- 
ing year because this would result in too 
many aircraft becoming obsolete at one 
time. Although War Department offi- 
cials were fully aware of this situation 
from the unhappy experience of the early 
twenties, they explained the matter to 
Congress only occasionally and rather 
casually. 86 

The several years of retrenchment in 
the aircraft program caused the nation's 



84 Testimony in House Hearings on WD appro- 
priation for 1935, January 25, 1934, pp. 12-18. 

85 Annual rpt of ASW Davison, 1932, pp. 40-41. 
88 See, for example, testimony of CofAC Westover, 

in House Hearings on WD appropriation for 1937, 
December 30, 1935, p. 307. 



CONGRESS AND THE AIR ARM 



67 



air arm to fall far below authorized 
strength. For the five years ending in 
June 1932, the Air Corps procured an 
average of 418 aircraft a year, just about 
all the aircraft allowed within the letter 
of the Air Corps Act, which restricted 
annual procurement to "approximately 
400." During the next four-year period 
ending June 1936, the Air Corps pro- 
cured an average of only 132 aircraft a 
year. Thus by the beginning of 1937, at 
a time when Congress had already raised 
the number of units authorized from 
1,800 to 2,320, the Air Corps was 1,247 
aircraft under authorized strength. 87 

Relief Funds for the Air Arm 

There was a very substantial appeal to 
congressmen in the idea of using relief 
money for military purposes. Relief ap- 
propriations were popular with great 
numbers of voters, whereas large sums 
earmarked for new aircraft nearly always 
evoked the charge of militarism, at least 
from a vociferous minority. And in early 
1934 the Air Corps needed assistance des- 
perately. Of more than $8,000,000 ap- 
propriated for new aircraft in that fiscal 
year, all but about $1,500,000 was held 
back by Executive action for reasons of 
economy. By the same token, about half 
the appropriation for maintenance and 
operations was withheld, reducing the 
Air Corps to a limping pace. In the face 
of this situation the War Department ap- 
plied to the Public Works Administra- 
tion for $39,000,000 to procure new air- 



8 " House Hearings on WD appropriation for 1938, 
March 35, 1937, pp. 516-17. The shortage indicated 
includes 74a aircraft on order but not on hand. 



craft, receiving $7,500,000. 88 Although 
this more than replaced the amount of 
the 1934 appropriation for new aircraft 
that the President had impounded as an 
economy measure, it did not actually op- 
erate to restore the full program. Even 
a generous grant of relief money could 
not restore the aircraft program to the 
position it would have enjoyed had the 
original appropriation not been im- 
pounded. There were delays in secur- 
ing the relief allotment, each of which 
delayed the signing of aircraft contracts, 
enlarged the gap between procurements, 
fostered the tendency of humping, and 
in general disrupted the efficient execu- 
tion of the program by breaking the es- 
sential cycle of annual procurement and 
obsoletion, which ideally should be 
spread evenly across the years. 

Relief money, air arm officials con- 
cluded, was no substitute for regular an- 
nual appropriations. When a congress- 
man protested that the reluctance of the 
Air Corps to apply for relief funds did not 
sound logical in the light of the prevail- 
ing shortages in the aircraft program, the 
Chief of the Air Corps explained just why 
relief funds were so unworkable. Those 
who doled out relief money attached all 
sorts of conditions to its use. It must be 
spent within a stated period, it must be 
distributed over a certain geographic 
area, and it must ensure jobs for a large 
number of people in a relatively short 
time. Obviously, the requirements of 
procurement by competitive bidding pre- 
cluded the possibility of following the 



88 Testimony of General MacArthur in House 
Hearings on WD appropriation for 1935, January 
25, 1934, p. 24; Senate Hearings, March 12, 1934, 
pp. 33-34. See also, House Rpt 869, 73d Cong, 2d 
sess, March 5, 1934, p. 3. 



68 



BUYING AIRCRAFT 



relief administrators' stipulations. If con- 
tracts were to be handed out on the basis 
of relief needs rather than upon demon- 
strable superior performance, the air arm 
could scarcely avoid procuring inferior 
aircraft. The Air Corps could easily use 
a hundred million in relief funds,- pro- 
sided it was not tied up with "a lot of 
strings." 89 

The Air Corps did not even request 
relief funds during fiscal year 1936, al- 
though large sums were available for 
military use and continued to be avail- 
able through fiscal year 1940. 90 The 
House Appropriations Committee joined 
with Air Corps officials in condemning 
the use of relief funds for military pur- 
poses—but for very different reasons. Re- 
lief funds appropriated in lump sums left 
to the Executive large areas of discretion 
over which Congress necessarily released 
control. The committee realized full 
well that this procedure left control of 
the funds to the private negotiations of 
such relief administrators as Mr. Harold 
Ickes rather than to the public record of 
congressional hearings and congressional 
debates published for all to study and 
criticize. To this end, the committee 
urged Congress to resume its constitu- 
tional duty to raise and support armies 
and not to delegate this vital function. 91 



89 House Hearings on WD appropriation for 1935, 
February 14, 1934, pp. 487-89, and February 15, 1934, 
pp. 528-29. See also House Hearings for 1936, Janu- 
ary 39, 1935, p. 559- 

1.0 House Hearings on WD appropriation for 1936, 
January ag, 1935, p. 557. For emergency funds allo- 
cated to WD, see Elias Huzar, The Purse and the 
Sword, Control of the Army by Congress Through 
Military Appropriations, 1933-50 (Ithaca, N.Y.: 
Cornell University Press, 1950), Table III, p. 141. 

1.1 House Rpt 869, 73d Cong, ad sess, March 5, 1934, 
p. 2. 



Congress as a whole ignored this sugges- 
tion and continued to leave the disposi- 
tion of large sums to Executive discretion 
for several more years. 

The congressmen might have been 
somewhat less willing to leave the appor- 
tionment of relief funds for military pur- 
poses in Executive hands had they been 
fully aware of the backstairs pressures 
brought by those attempting to influence 
the administrators. Although it is im- 
possible to believe that any congressman 
was entirely blind to the practice, many 
must have been unaware of the extent to 
which administrators were plagued. One 
prominent aircraft manufacturer, for ex- 
ample, proposed a plan to channel 
$10,000,000 from the relief fund to the 
Army and another $10,000,000 to the 
Navy for aircraft procurement. "This 
recommendation is entirely unselfish , . .," 
he asserted, stemming from a desire to 
further the aim of the administration in 
creating jobs. 92 The same manufacturer 
wrote Maj. Gen. Oscar Westover, Chief 
of the Air Corps, elaborating upon the 
$10,000,000 plan and urging the air arm 
to take the initiative in seeking the 
funds. 93 The next day the manufacturer 
telephoned General Westover to report 
that James Roosevelt was "arranging with 
Colonel Watson" to let him on the Hous- 
ton when the President started on a fish- 
ing trip. "My friend says he can't guar- 
antee the thing, but he says that Jimmie 
said he thought he could fix it." The 
manufacturer urged the Chief of the Air 
Corps, "Get busy on it, and if you can 
avoid the Director of the Budget, I would 

92 Telg, Mr. ... to James Roosevelt, 4 Jul 38, AFCF 
112.4 Allotment and Appropriation of Funds (A). 

33 Mr. ... to "dear Oscar" [Westover], 12 Jul 38, 
same file. 



CONGRESS AND THE AIR ARM 



69 



certainly do it. If you can't, then let me 
know and I will get Jimmie busy on the 
Director of the Budget." The manufac- 
turer was explicit in his promises to the 
general: "If you get in any trouble . . . 
I will have influential men there from 
New York. . . ." 94 

The air arm reaction to this approach 
was characteristic of the military response 
to political dealings in general. While 
admitting that the funds were alluring, 
the Chief of the Air Corps replied with 
conscious rectitude that it would be im- 
possible to proceed in the matter in view 
of certain previous "definite and posi- 
tive" agreements made with the President 
and the Bureau of the Budget. 1 ' 5 Back- 
stairs proposals such as this were prob- 
ably unavoidable in the allocation of re- 
lief funds. 

If the air arm was both unable and un- 
willing to deal politically and relief funds 
were inherently unworkable, there was 
no alternative but to resort once again to 
the normal process of annual appropria- 
tion. This, of course, returned the ques- 
tion from the White House to the Hill. 
The change of scene was disappointing to 
those who looked for prompt completion 
of the aircraft program, for the delays 
that had long hampered air arm exploita- 
tion of relief funds returned again in new 
guises. 

Further Delays in Reaching 
Full Strength 

Although by the mid-thirties the Air 
Corps was certainly not the runt of the de- 




General Westover 



fense litter, all was not well. In 1935, nine 
years after the five-year program began, 
the Air Corps Avas still 25 percent under 
the aircraft strength officially authorized 
by Congress in 1926. Despite the desire 
of many in Congress to eliminate this lag, 
there were a number of obstacles to an 
immediate solution of the problem. Even 
military spokesmen, who might be ex- 
pected to advocate immediate comple- 
tion of the program, testified before Con- 
gress against any plan to make up the 
deficiency in one jump. os To reach full 



04 Phone Transcript, Mr. ... to Gen Westover, 
13 Jul 38, same file. 
us Westover to Mr. . . ., 20 Jul 38, same file. 



013 See, for example, testimony of ASW Woodring, 
Senate Hearings on WD appropriation for 1937, 
March 3, 1936, p. 25. 



70 



BUYING AIRCRAFT 



program strength at one time, they 
pointed out, would incur a series of evils 
each almost as detrimental in its effect as 
the original understrength condition. 
The tactical effectiveness of the nation's 
aerial defense would rise and fall in a 
sawtooth pattern as each group of newly 
purchased aircraft gradually moved to- 
ward obsolescence followed abruptly by 
replacement. Moreover, to absorb the 
demand for large numbers of aircraft 
within a short span of time, the aircraft 
industry would have to expand its facili- 
ties, only to face a long period almost de- 
void of military orders until another peak 
load appeared several years later. 

Capital diverted to the expansion of 
production facilities to meet abrupt de- 
mands for large numbers of aircraft 
could not be extracted readily for rein- 
vestment in research and development 
work during the subsequent slack periods 
of low demand. Without capital for re- 
search and development, the aircraft in- 
dustry could not hope to produce the su- 
perior aircraft so much desired by the air 
arm. In this situation, Air Corps spokes- 
men could scarcely be reproached for not 
pressing Congress for large appropria- 
tions to bring the program to completion 
at once. 

If air arm officers were above reproach 
in not having asked for too many air- 
planes, were they equally faultless in not 
asking for enough? After careful calcu- 
lation, air staff planners had determined 
that it was essential to procure 800 air- 
craft each year for several years to keep 
pace with attrition as well as obsoletion 
and at the same time build up to the 
strength authorized in 1936. Having de- 
termined the 800 figure, the Air Corps 
went to Congress with estimates for fiscal 



year 1937 calling for no more than 457 
aircraft. An explanation for this seem- 
ing contradiction is readily apparent. No 
matter how much the Air Corps may have 
desired funds for 800 aircraft, the Bu- 
reau of the Budget set the ceiling at 457 
and no higher figure could be advocated 
before Congress. 

In the final analysis Congress and not 
the Bureau of the Budget determined 
the size of the appropriation for aircraft. 
In this instance, a probing congressman 
was helpful enough to ask about the full 
increment of 800 aircraft and how much 
more it would cost than the 457 in the 
estimate. The Chief of the Air Corps re- 
plied to the question briefly and there 
the matter dropped.' J7 The opportunity, 
once presented, did not arise again. For 
want of a substitute program worked out 
in detail, and for want of a willingness 
to press such a plan when the opportunity 
offered, the air arm let another fiscal year 
slip by without bringing the air weapon 
up to authorized strength. When offered 
no carefully formulated alternative to the 
budget program, Congress could do little 
but accept the Executive estimate sub- 
stantially as it was presented. Some re- 
sponsibility for the air arm failure to 
reach authorized strength must therefore 
rest on military shoulders. 

Among the many factors contributing 
to the lag between aircraft on hand and 
strength authorized was the general rise 
in prices that characterized each succeed- 
ing year after 1932 or 1933. The origi- 
nal Air Corps estimate for fiscal year 1935 
called for 348 new aircraft. Congress ap- 
propriated funds for the aircraft, but 



97 House Hearings on WD appropriation for 1937, 
December 31, 1935, p. 341. 



CONGRESS AND THE AIR ARM 



71 



sharp increases in unit costs occurring 
after the year's program had been set up 
resulted in procurement of only 222 air- 
craft. 98 

In the following fiscal year the adverse 
effect of rising prices was even more pro- 
nounced. Because of Bureau of the 
Budget restrictions, the Air Corps esti- 
mate asked Congress for only 547 new 
aircraft, far below the number required 
to advance toward full program 
strength. i}!> This was only the beginning 
of difficulties. Between the printing of 
the budget and the time the Appropria- 
tions Committee sent a bill to the House, 
aircraft prices increased so sharply that 
the funds proposed in the budget would 
buy only 450 aircraft, a number barely 
sufficient to offset the normal attrition 
rate for obsolescence and washouts. 100 
Congress farsightedly added some $4,500,- 
000 to the budget funds earmarked for 
new aircraft to offset the price rise, but 
even this increase proved insufficient. 
Prices continued to rise, and by the year's 
end the funds were sufficient to procure 
only 361 aircraft despite the generous ef- 
forts of Congress in appropriating more 
funds than the President asked for. 101 

At the root of the trouble lay the long- 
time lag between budget planning and 
the ultimate contract and subsequent de- 
livery of new aircraft. Many months 
elapsed from the initiation of a budget 
until final appropriation, but by no 
means did appropriation mark an end to 



98 House Hearings on WD appropriation for 1936, 

January 29, 1935, p. 535. 

99 Ibid., pp. 556-57. 

100 T. B. Parks in Cong Red, February 19, 1935, 

pp. 2214-15. 

101 House Hearings on WD appropriations for 1937, 
December 30, 1935, pp. 322-23. 



the delays. There were contracts to be 
negotiated and still further months to 
wait before new aircraft actually reached 
Air Corps stations. Even where contracts 
were all drawn and required only formal 
approval of the appropriation to go into 
immediate effect, deliveries usually were 
months and even years into the future. 102 

Contracts were not always ready for 
signature as soon as the appropriation 
bill became law. In fact, at one time 
during the depression, aircraft procure- 
ment officers were specifically instructed 
to award contracts as late as possible in 
the fiscal year to slow the rate of cash 
withdrawals from the Treasury so as to 
help balance the budget. 103 This proc- 
ess, so familiar to every bill-paying house- 
holder, reflected a thoroughly under- 
standable maneuver on the part of the 
President. It became politically expedi- 
ent to protect the Treasury, so the Presi- 
dent ordered a delay in obligating funds. 
Delay, coupled with the rise in prices, 
resulted in procurement of fewer air- 
craft. It was the President who issued 
the orders, but it was the congressmen 
who received the blame. 

At times the congressmen became ex- 
asperated with the perversities of an 
aviation program that refused to reach 
completion in the face of determined 
efforts to that end, and they had ample 
grounds for annoyance. Not only were 
they disturbed by the effect of the time 
lag between appropriation and actual 
delivery of aircraft, but in addition they 
felt they had been deceived when, on oc- 
casion, air officers failed to obligate all 

102 Ibid., pp. 327-28. 

103 CofAC to Chief, Mat Div, 5 Aug 37, quoting 
Budget Office, WD, to CofAC, 3 Aug 37, AFCF 
112.4-A. 



72 



BUYING AIRCRAFT 



the funds of one fiscal year before the 
next year's appropriation bill became 
law. Why frighten the voter-taxpayers 
with appropriations larger than need be, 
argued the legislators, if the funds will 
not be spent until a later fiscal year. 104 
They were further annoyed to learn that 
air arm officers were asking funds for pro- 
duction contracts when even the types to 
be procured had not yet been decided 
upon. 105 Since months and even years 
might elapse between the formulation of 
estimates and the final steps of procure- 
ment, this was not really surprising. 
Moreover, considering the rapid pace of 
design change in aeronautics, rigid deci- 
sions as to specific aircraft types in the 
early phases of budgetary planning might 
have led to the procurement of obsolete 
weapons. For many reasons, then, it was 
difficult if not impossible to close the gap 
between original estimate and final air- 
craft, even though these reasons were 
often obscure to the bedeviled legislator. 

There were a number of circumstances 
that led to the rapid price rises of the 
middle thirties. One set of motivating 
causes can be grouped under the heading 
of social legislation. A second set of fac- 
tors arose from the increasing technical 
complexity of aircraft. Four-engine 
bombers began to replace twin-engine 
bombers, and the relative proportion of 
bombers to pursuits increased fivefold in 
the decade from 1927 to 1937. Improved 
communications equipment, variable 
pitch propellers, and the introduction of 



104 House Hearings on WD appropriation for 1937, 
December go, 1935, p. 310; House Hearings on Naval 
appropriation for 1937, March 2, 1936, pp- 520-21. 

1(15 Ibid. See also, House Hearings on WD appro- 
priation for 1937, December 30, 1935, p. 335. 



many sensitive instruments for flight and 
navigation combined with hundreds of 
other technical innovations to make each 
individual aircraft a more intricate and 
more expensive piece of equipment than 
ever before. Probably the most obvious 
index of this rising curve of complexity 
is to be found in terms of the upward 
trend in gross weights. A single-place, 
single-engine fighter weighed 1,600 
pounds empty in 1918 and 2,200 pounds 
in 1933; by the end of the thirties the 
same type of aircraft ranged between 
5,500 and 6,000 pounds. 106 

The appropriation dollar also pur- 
chased fewer aircraft pounds with each 
passing month. Appropriations that 
seemed adequate when air officers pre- 
pared estimates became hopelessly inade- 
quate when the time arrived to sign 
contracts with individual aircraft manu- 
facturers. Attack bombers, for example, 
priced at $60,000 each in original esti- 
mates, actually cost about $ 1 1 0,000 apiece 
in the contracts finally drawn several 
months later, a characteristic pattern 
throughout the latter half of the thir- 
ties."" 

Congress Tries Some Short Cuts, 

If prices continued moving up between 
the time of estimate and the time of con- 
tract, the simplest solution was to ask 



106 Figures taken from specifications in The Offi- 
cial Pictorial History of the AAF, pp. i86ff. See 
also, for description of increased complexity of air- 
craft and the rising proportion of bombers, House 
Hearings on WD appropriation for 1938, March 25, 
!937» PP- 520-22. 

107 House Hearings on WD appropriation for 1938, 
March 29, 1937, p. 559. 



CONGRESS AND THE AIR ARM 



73 



Congress for more than enough funds to 
absorb the difference. Unfortunately, 
such an obvious maneuver was difficult 
to execute. In the middle thirties every 
extra dollar added to appropriations for 
the military forces had to be made in the 
very teeth of a popular clamor for the 
most stringent economies. There was as 
well the not inconsiderable protests of 
the pacifists. Confronted with large 
bodies of hostile opinion, the congress- 
men had to resolve conflicting objectives. 
They had to provide sufficient defense 
without laying themselves open to the 
charge of war mongering and find ways 
and means to improve defenses without 
presenting the bill to the taxpayers— at 
least not right away. To serve these mu- 
tually exclusive ends, Congress resorted 
to numerous expedients. 

One short cut was to use "contract au- 
thorizations" in lieu of outright appro- 
priations in any given fiscal year. By this 
device Congress authorized the air arm 
to obligate certain sums in contracts for 
which payment would not fall due until 
a period beyond the fiscal year in ques- 
tion. By resorting to contractual au- 
thorization, in addition to the funds ac- 
tually appropriated, congressmen hoped 
they would leave air arm officers free to 
negotiate contracts and in general to ad- 
vance the business of defense without 
having to present the unwelcome tax bill 
until at least a year later. 108 

Contract authorization may have been 
a politically expedient device, but there 
were certain very real drawbacks in its 



use. When Congress voted for increased 
contract authorizations rather than out- 
right appropriations, the air arm was un- 
able to contract for aircraft until late in 
the fiscal year. The sheer complexity of 
aircraft production was such that hun- 
dreds of thousands of dollars in tooling 
costs and inventory charges were encoun- 
tered before a single aircraft started down 
the assembly line. To help manufac- 
turers over these financial hazards, the 
War Department had instituted a system 
of partial payments or progress payments 
to be made in advance of actual deliveries 
as the preparation for production reached 
certain predetermined goals. This pro- 
cedure required large sums of cash soon 
after the signing of a contract. Where 
Congress provided contract authoriza- 
tion and left the actual appropriation of 
cash for the next fiscal year, the require- 
ment for cash disbursals shortly after for- 
mal approval of contract made it neces- 
sary to delay contract negotiations until 
just before the next fiscal period, when 
cash would be available to honor the ob- 
ligation. 10 " This defeated the intent of 
Congress. 

Another drawback in the use of con- 
tract authorizations lay in their adminis- 
trative complexity. Appropriations ran 
for one year before reverting to the Treas- 
ury. Contract authorizations ran for two 
years. But funds authorized in one fiscal 
year had to be paid out during the next. 
Thus in any given year the air arm ap- 
propriation might include funds to cover 
previous contract authorizations, author- 
izations projecting into the fiscal period 
ahead, and funds for current obliga- 



108 For a frank expression of this evasion, see Sen- 
ate Hearings on WD appropriation for 1938, May 36, 
"937. P- 61. 



10 » Ibid., pp. 65-66. 



74 



BUYING AIRCRAFT 



tion. 110 Occasionally some members of 
Congress appeared bewildered by this 
maze of overlapping types of appropria- 
tions and confessed themselves to be a 
bit uncertain about the precise nature 
of a current appropriation measure. 

During the late thirties Congress tried 
yet another device in an effort to satisfy 
the demand for a defense air arm at full 
strength without greatly increasing the 
tax bill. This time the plan consisted 
of a reduction in the number of spare 
engines to be procured, using the funds 
thus gained to buy more aircraft. In 
1937 the Appropriations Committee took 
the initiative in reducing the number of 
spare engines from 100 percent to 50 per- 
cent of the number of aircraft on con- 
tract. From the funds so saved, the com- 
mittee contemplated procurement of 
fifty-eight additional aircraft, which 
promised to help close the gap between 
available strength and strength author- 
ized. 111 Air Corps officers protested that 
this policy merely robbed Peter to pay 
Paul. Without an ample reserve of spare 
engines, they insisted, the Air Corps 
could not make full use of its increased 
strength in aircraft. Marked fluctuations 
in the average number of engines in over- 
haul at any one time made it imperative 
that the reserve of spare engines be am- 
ple to cover the local needs of a widely 
distributed and ever-shifting; air force. 112 

In the face of air arm protests, Con- 
gress continued the 50 percent spare en- 



110 For an example of the overlapping appropria- 
tions and. contract authorizations, see House Hear- 
ings on WD appropriation for 1939, February 8, 1938. 

111 House Rpt 1979, 74th Cong, 2d sess, February 
10, 1936. 

112 House Hearings on WD appropriation for 1935, 
February 15, 1934, pp. 554-55. 



gine policy again in 1938. It was easier 
for congressmen to point to the tangible 
evidence of a rising total of aircraft in 
replies to the taxpayers' questions than 
to refer to a change in spare engines pol- 
icy that was elusive if not entirely mean- 
ingless to the average citizen. Justifica- 
tions based on the Navy's policy of 33 
percent spare engines were irrelevant, 
for the Navy kept 50 percent of its air- 
craft strength in reserve at all times, cre- 
ating in effect a 100-percent engine re- 
serve even before procuring a single 
spare engine. 1 ' 3 The Chief of the Air 
Corps publicly declared that the 50 per- 
cent spare engine policy of Congress was 
positively dangerous, but the policy con- 
tinued. 111 One congressman expressed 
the problem concisely: the legislators 
were anxious to get more aircraft but 
they were reluctant to go over the Bu- 
reau of the Budget figure. 11 " By remain- 
ing within that figure, congressmen could 
make the President shoulder the taxpay- 
ers' protests. 

There was no escape from the conflict- 
ing and mutually exclusive objectives of 
more aircraft and lower taxes, but with 
some ingenuity the extremes could be 
made less antagonistic. By the middle 
thirties the Navy had devised a scheme 
that the Air Corps might have emulated 
with profit. The Navy's plan was simple. 
Instead of lumping all aircraft procure- 
ment under one budget heading for "new 
construction," there were two headings: 
"new construction" and "replacement 



113 Harding, Aviation Industry, p. 28. 

114 House Hearings on WD appropriation for 1939, 
February 8, 1938, pp. 420-21; Senate Hearings, April 
1, 1938, pp. 3-5. 

115 House Hearings on WD appropriation for 1938, 
March 29, 1927, p. 57. 



CONGRESS AND THE AIR ARM 



75 



aircraft." 118 By segregating those items 
intended to maintain the force at its cur- 
rent level from those that would increase 
the force, the Navy sugar-coated the pill. 
Instead of confusing the congressman 
with involved charts and intricate tables 
of figures, the Navy scheme offered but 
two quantities, one for augmentation, 
one for replacement. When so tagged, 
both groups presented psychological haz- 
ards to the congressman. If he voted 
against "replacement," his constituents 
could criticize him for weakening na- 
tional defense. If he voted against "aug- 
mentation," they would charge him with 
failing to strengthen national defense. 
On the other hand, by lumping both 
types of procurement into a single figure, 
the Air Corps' estimates obscured the 
precise character of aircraft requirements. 

Congress was by no means solely re- 
sponsible, however, for the protracted 
delays that marked the air arm's attempt 
to reach the full strength authorized. 
The Air Corps itself shared heavily in 
this responsibility. 

The Air Arm Imposes Delays 

Air arm leaders on occasion followed 
policies closely akin to those employed 
by Congress in stressing the appearance 
of strength rather than the real thing. 
During fiscal year 1938, for example, the 
Air Corps tried the experiment of lump- 
ing two years' supply of bombers in one 
year while buying no pursuit aircraft and 



116 House Hearings on Navy appropriation for 

1936, March 13, 1935, p. 546. Contrast the Navy's 
breakdown u-ith the statement of General Drum on 
the Air Corps' needs, House Hearings on WD ap- 
propriation for 1936, January 14, 1935, p. 53. 



then reversing the procedure in the fol- 
lowing year, buying all pursuits and no 
bombers. By increasing the number of 
units on contract, the unit price de- 
creased, making it possible to secure 
more aircraft with the same amount of 
money. 117 This was a persuasive argu- 
ment when presented to the Appropria- 
tions Committee; unfortunately it ig- 
nored a most important consideration. 
The "two year's supply" plan brought 
in more units from the funds available, 
but it failed to take cognizance of the air 
arm role as an M-day force to be main- 
tained in a condition of constant readiness 
against surprise attack. By purchasing 
an excess of one type and none of another 
type each year, the Air Corps threatened 
to remain in a continual state of disequi- 
librium insofar as tactical aircraft were 
concerned. If pursued extensively, this 
policy of quantity rather than quality 
might srive the air arm its authorized 
strength but at the price of combat effec- 
tiveness, although it must be admitted 
that the increased number of aircraft on 
any one contract resulted in longer pro- 
duction runs, which strengthened the 
capacity of the industry for mass pro- 
duction. 

While the two-year supply procedure 
did undoubtedly appear to favor num- 
bers rather than performance, the Air 
Corps did not pursue the policy consist- 
ently. Indeed, Congress criticized the 
air arm for doing just the opposite— de- 
laying production contracts in order to 
get some new development lying over the 
horizon. Air Corps spokesmen denied 



117 House Hearings on WD appropriation for 1939, 
February 8, 1938, pp. 438-39, and for 1938, March 29, 
'937. PP-552.557. 



76 



BUYING AIRCRAFT 




Boeing B-17 



the charge of delays, pointing out that 
funds had to be obligated within the fis- 
cal year or revert to the Treasury, but 
they were quite willing to admit that the 
air arm actively favored quality rather 
than quantity. 118 

The Chief of the Air Corps made no 
secret of the circumstance that the funds 
appropriated by Congress sometimes 
bought fewer aircraft than intended in 
the original estimates for the simple rea- 
son that manufacturers turned up at the 
last minute with superior aircraft of 
radically improved performance— at a 
higher price. 119 To ignore this advanced 
equipment would be to arm the nation 
with weapons less than the best. 

In theory at least, there was no alter- 
native to buying the latest and the best 
aircraft available, even though it inevi- 



118 House Hearings on WD appropriation for 1938, 
March 29, 1937, p. 557. 

119 House Hearings on WD appropriation for 1937, 

December 30, 1935, pp. 323-24. 338. 



tably meant buying fewer units with the 
funds available. Such a course was the 
ideal and sometimes the Air Corps pur- 
sued it. In practice, however, Air Corps 
officials did not wish to risk irritating 
congressmen, who seemed inclined to 
judge air defense in terms of numbers 
of aircraft on hand rather than in terms 
of quality, performance, or tactical suit- 
ability. 

An episode in April 1937 will illus- 
trate this tendency. The chairman of 
the Appropriations Subcommittee that 
handled War Department estimates ad- 
mitted to the House that he had no great 
familiarity with military matters. Nev- 
ertheless, he recorded his protest against 
the "unwise" tendency in the air arm to 
build larger and more expensive bomb- 
ers such as the Boeing B-i 7. 120 Less than 
two months later the effect of this type 
of criticism became evident. The esti- 
mates for fiscal year 1938 called for 177 

120 Cong Red, April 29, 1937, pp. 3984, 3988-89. 



CONGRESS AND THE AIR ARM 



77, 




Douglas B-18 



B-18 twin-engine bombers and 13 B-17 
four-engine bombers. After operational 
tests by tactical units, the GHQ Air 
Force "strongly recommended" that only 
the B-i7 be procured. To buy the more 
expensive bomber, however, would be to 
buy fewer bombers. In the face of con- 
gressional criticism, Air Corps officers 
felt it was "impractical" to do so unless 
the Secretary of War was personally will- 
ing to "accept the responsibility to Con- 
gress" for decreasing the total number of 
aircraft in the 1938 budget. Estimates 
for the four-engine bombers were thus 
deferred until fiscal year ig3g. 121 As a 

121 2d Ind, OCAC to TAG, 9 Jun 37 (basic un- 
known), WFCF 452.1 Four Engine Bomber igg6-s[g. 
A comparison of the B-17 and B-18 in terms of per- 
formance indicates why the decision to delay the 
B-i7 was so critical: 





Boeing B-17 


Douglas B-18 


High s peed 


256 m.p.h. at 14,000 


214 m.p.h. at 10,000 


Full load range. . 


1,327 miles 


690 miles 


Bomb load 


10, 500 lbs. 


6,500 lbs. 



consequence the B-17 units, considered 
vital to the nation's defense, were not 
procured until the crisis had already ar- 
rived. 

The search for quality rather than 
quantity was not the only Air Corps pol- 
icy that retarded completion of the au- 
thorized aircraft program. Another fac- 
tor was the air arm's insistence upon a 
"balanced program" in which procure- 
ment of new aircraft remained in phase 
with the construction of new facilities 
and the addition of personnel. Experi- 
ence in past years had revealed what hap- 
pened when Congress provided new air- 
craft without increasing the funds avail- 
able for trained personnel for them. Even 
worse was the situation in which man- 
power increased without a commensu- 
rate increase in funds for housing. By 
the same token new aircraft, unless sup- 
ported with adequate technical facilities 
—air bases with depot repair shops and 
the like— did not really strengthen the 



78 



BUYING AIRCRAFT 



nation's aerial might. Technical con- 
struction—barracks, airstrips, and expen- 
sive machine tools in repair depot shops 
—did not fare as well as aircraft when it 
came to appropriations. As a result air- 
craft, although usually understrength, 
generally ran ahead of personnel and 
supporting facilities. Since the appro- 
priation acts carried restrictive clauses 
specifying not less than a fixed amount 
to be spent for aircraft, air arm leaders 
could not correct the imbalance by ad- 
ministrative action. 

Repeatedly during the thirties Air 
Corps officers proposed means for over- 
coming the lack of balance in manpower, 
air weapons, and supporting facilities. 
One such recurring suggestion involved 
a plan to secure in addition to the regu- 
lar itemized appropriation a lump sum 
left entirely free for commitment accord- 
ing to administrative discretion. Such a 
fund would have provided an escape from 
the embarrassment of having more air- 
craft than there were trained pilots to fly 
them, but Congress was unwilling to 
grant funds without earmarking them 
rather closely. Legislative fear of Exec- 
utive encroachment accounted for at 
least some of this opposition. 122 

Failing to secure funds with which to 
rectify impossible situations, air arm offi- 
cers tried another expedient. This time 
the plan was to forestall trouble in ad- 
vance by providing Congress with a 
comprehensive scheme or "balanced pro- 
gram" in which aircraft, personnel, hous- 
ing, training, and technical facilities were 
all carefully dovetailed into a five-year 
plan by which trained pilots would be 



122 Cong Red, March 14, 1934, p. 4506. 



ready when aircraft left production lines 
and adequate barracks would be built 
and waiting for the arrival of newly re- 
cruited troops. 123 Above all, those who 
planned for the air arm wished to avoid 
the condition created by Congress in fis- 
cal year 1937 when $41,000,000 of total 
appropriation of $59,000,000 went to the 
purchase of new aircraft, leaving only 
$18,000,000 for personnel, maintenance, 
operation, training, development, and 
construction of base facilities— an almost 
impossible situation. 124 

Unfortunately, by 1938 the popular 
hue and cry called for big increases in 
manpower, and air arm officials, who had 
reluctantly curbed the heavy bomber pro- 
gram they really desired in order to keep 
it in phase with the limited number of 
men available, found themselves con- 
fronted with an abnormal increase in 
manpower granted by Congress in re- 
sponse to popular pressure. 123 This was 
frustrating to air arm officers when the 
crisis arrived because it left them highly 
vulnerable to uninformed criticism for 
not having demanded a larger number 
of aircraft. 

Early in February 1938, the Chief of 
the Air Corps optimistically reported 
that the end was in sight. If all went 
well and Congress appropriated the funds 
as planned, the Air Corps would be able 
to complete the 1926 "five-year" program, 
as modified and revised in 1936, during 



i2» Acting CofAC to TAG, 5 Aug 36, 331.9A OGAC 
Organization, and AFCF 360.01A WD Policy Toward 
Aviation. 

Memo, Brig Gen G. R. Spaulding for CofS, 36 
Mar 37, AFCF 113.4A, Allotment of Funds. 

125 TAG to CGGHQAF, 38 Mar 38 and TAG to 

CofAC, 11 Apr 38, 321.9 A OCAC Organization, 
AFCF. 



CONGRESS AND THE AIR ARM 



79 



the fiscal year 1940. 120 Who was respon- 
sible for this long delay? No one could 
point to any single group for censure. 
All who participated in the budgetary 
process— military officers, Executive 
agents, and legislators— shared in the re- 
sult. At best, the limited funds made 



126 House Hearings on WD appropriation for 1939, 
February 8, 1938, p. 437. 



available by Congress for aircraft pro- 
curement in the between-war years re- 
flected the severe limitations if not the 
inadequacies of the nation's system of 
budgeting for defense. But even lavish 
approriations, had they been voted, 
would not have ensured an adequate 
air force if the air arm's methods of pro- 
curement were not also suitably per- 
fected. 



CHAPTER IV 



Procurement Legislation, Organization, 
and Administration 



Organic Legislation for the Procurement 
of A ircraft 

The Statutory Tradition 

The legal basis upon which the great 
bulk of all military procurement has 
rested is Section 3709 of the Revised 
Statutes. This section is a codification 
of a statute enacted in 1861, which itself 
rested upon earlier precedents dating 
back to the eighteenth century. 1 The 
essentials of Section 3709 are contained 
in a very few words: "All purchases and 
contracts for supplies . . . shall be made 
by advertising. ..." In short, to prevent 
favoritism in the award of public con- 
tracts, the law required advertisement or 
a public invitation to bid followed by 
the award of contracts upon the basis of 
proposals received. The basic statute 
authorized exceptions to this require- 
ment when the "public exigency" im- 
posed need for immediate delivery, but 
the spirit and intent of the law are clear. 
Subsequent legislation made the intent 
even more specific. A statute of 1884 
provided, "the award in every case shall 
be made to the lowest responsible bid- 



der for the best and most suitable arti- 
cles. . . ." 2 Contracting officers who 
sought exceptions to this ruling ran 
headlong into an opinion of the Attor- 
ney General of the United States, who 
expressed a continued confidence in the 
wisdom of competition in public con- 
tracts when he held that all such con- 
tracts must be made according to Section 
37°9 of the Revised Statutes, save where 
specifically exempt by law. 3 

There were significant exceptions pro- 
vided by the express will of Congress. 
Where but one manufacturer produced 
a given item, advertisement for bids 
could be w T aived. In an instance such as 
this, the manufacturer was known in the 
jargon of the services as a "sole source." 
Another exception, closely related, in- 
volved the circumstance in which the 
manufacturer held a patent on an item 
sought by the government. Here, too, 
public advertisement for bids would be 
to no purpose since only the patent 
holder could reply. Still another excep- 
tion authorized by statute permitted the 
purchase of items that were parts of items 
already in use. In an organization such 
as the air arm, where spare parts played 



1 Cited as Rev Stat 3709. Based upon act of March 
s>, 1861 (12 Stat 220), 41 USCA 5. 



2 Act of July 5, 1884 (23 Stat 109). 

3 22 Op Atty Gen 1, December 20, 1897. 



PROCUREMENT LEGISLATION, ORGANIZATION, ADMINISTRATION 81 



an unusually important role, this excep- 
tion could be of considerable impor- 
tance. 4 These and a few other similar 
deviations granted by Congress did per- 
mit some escape from the compulsions 
of the basic statutes, but probably the 
most significant modification, insofar as 
military contractors were concerned, ap- 
peared in a law enacted in 1901. 

The 1901 statute drew several of the 
previous stipulations into a single law, 
adding a noteworthy innovation: "Ex- 
cept in cases of emergency or where it is 
impractical to secure competition . . . the 
purchase of all supplies . . . shall be made 
only after advertisement and . . . shall be 
purchased where . . . cheapest, quality 
and cost of transportation and the inter- 
ests of the Government considered." 5 
While reiterating the earlier provisions 
for protecting the interest of the public, 
these provisions would appear to broaden 
the law and leave a wide margin of dis- 
cretion to responsible officials in the War 
Department. Both the words the inter- 
ests of the Government considered and 
the words where, it is impracticable to 
secure competition leave a great deal of 
latitude to the contracting officer. Nev- 
ertheless, even though this statute ap- 
peared to grant generous exemptions 
from the mandate to make all military 
contracts by competition for low bid, 
in practice contracting officers seldom 
awarded on any other basis. A number 
of considerations conspired to this result. 

Statutes usually require interpretation. 
In the normal course of events the laws 
governing procurement became en- 

4 SW D. F. Davis to Judge A. C. Denison, 1 Dec 25, 
Morrow Hearings, p. 1820. The exceptions are listed 
here, but their authorizing statutes are not shown. 

5 Act of March 2, 1901 (31 Stat 905), 10 USCA 1201. 



crusted with legal barnacles as court de- 
cisions, rulings of the Comptroller Gen- 
eral, and opinions of Attorneys General 
or Judge Advocates General operated to 
define the scope of executive discretion. 
Just how far this process of legal accre- 
tion could go is suggested in the thirteen 
separate opinions as to what is and what 
is not a "public exigency" that annotate 
Section 3709 of the Revised Statutes. 8 
Beset with rulings and opinions on every 
hand, contracting officers were inclined 
to use the safe ground of compliance with 
the stipulations placing purchases for the 
government on a competitive basis. 

There were urgings other than legal 
opinions that induced contracting offi- 
cers to award on low bid rather than ex- 
ercise discretion. Low bids could be 
determined objectively, whereas "qual- 
ity" or "the interests of the Government" 
were largely matters of opinion. Being 
human, contracting officers naturally 
tended to the safer course since it was 
far easier to point out the money saved 
in awarding to the low bidder than it 
was to prove an alleged increase in qual- 
ity, performance, or convenience to the 
government to be obtained from an 
award to other than the low bidder. 

Even the exceptions specifically au- 
thorized by Congress were seldom fully 
exploited in practice because of the con- 
servative tendencies of contracting offi- 
cers working in the shadow of the mili- 
tary prison at Leavenworth. Competitive 
procurement with award to the low bid- 
der was the deeply entrenched tradition 
of military procurement in the United 
States when World War I arrived to up- 
set the normal pattern. 

6 See 41 USCA 5, sec. 40. 



82 



BUYING AIRCRAFT 



Procurement Legislation 
in World War I 

In war the regular peacetime proce- 
dures for procurement are inadequate. 
Speed is more important than price; a 
dollar saved may mean a battle lost. Con- 
gress recognized this when framing the 
basic statutes governing military procure- 
ment. In emergencies the Secretary of 
War and his agents did not need to resort 
to price competitions; they could negoti- 
ate contracts in whatever appeared to be 
the best interests of the government. 7 
This left the selection of contracting pro- 
cedures to the discretion of the officials 
representing the War Department. 
Broadly speaking, the choice consisted of 
two forms, the fixed-price contract and 
the cost-plus contract, each representing 
a fundamentally different philosophy of 
contractual relationship. 

The fixed-price or lump-sum contract, 
as it was sometimes called, was the con- 
ventional form used in peacetime. 
Whether it was awarded to the low bid- 
der as a result of public advertisement 
and competition or by negotiation and 
agreement as to price at the discretion 
of departmental officials, the fixed-price 
contract set in advance the price to be 
paid by the government. The contrac- 
tor assumed all risks, and in return he 
was free to increase his profit by improv- 
ing his efficiency and lowering his costs. 
For some undertakings, however, the 
fixed-price form of contract is impracti- 
cal. Where the product is novel and 
costs are hard to estimate in advance, 
contractors are understandably reluctant 
to assume the risks involved, especially 



7 Ibid., sec. 43. 



in a period of rising costs in material and 
labor. To induce manufacturers to bid, 
officials in the War Department turned 
to the cost-plus form of contract. 

Cost plus is actually a generic term 
embracing a number of variations, but 
all share one element in common: the 
government and not the contractor is ex- 
pected to assume most of the risks. The 
latter merely passes his bills for such items 
as labor and material to the government 
for payment. His profit for managerial 
services is then computed by one of sev- 
eral methods. In World War I, profits 
on this form of contract were computed 
as a percentage of cost. Such contracts 
were known as cost-plus-percentage-of- 
cost (CPPC) contracts. The weakness 
of such an arrangement is obvious. The 
contractor had little or no incentive be- 
yond patriotism to hold costs down and 
considerable incentive for pushing costs 
up to enlarge his profit. 

The dilemma confronting procure- 
ment officials within the War Depart- 
ment is readily apparent. They had to 
draft a contract by which the government 
assumed the risks but still left an incen- 
tive sufficiently strong to induce contrac- 
tors to hold down costs. Since airplanes 
had never been mass produced before 
World War I and the hazards of such an 
operation were great, it was, logically 
enough, the members of the Aircraft 
Board who devised a modified version 
of the cost-plus contract to resolve the 
dilemma. 8 Under the terms of the mod- 

8 The Aircraft Board was a subordinate agency of 
the Council of National Defense established by the 
Defense Act of 1916. Until October 1917 the board 
was known as the Aircraft Production Board. See 
C. L. Lord and A. D. Turnbull, History of Naval 
Aviation (New Haven, Conn.: Yale University Press, 
1949), p. 118. 



PROCUREMENT LEGISLATION, ORGANIZATION, ADMINISTRATION 83 



ified cost-plus, or bogey, contract, as it 
came to be called, the government un- 
dertook to pay the contractor for all 
labor, materials, depreciation, and over- 
head charges, as well as for all special 
tools and all additional facilities re- 
quired, retaining title in the case of the 
latter two items. In addition, the gov- 
ernment would pay the contractor a 
profit or fee representing a percentage 
on a cost, to be estimated in advance. 
Thus if actual costs exceeded estimated 
costs, the contractor could not increase 
his profit. On the other hand, the ad- 
vance estimate of cost was to provide a 
basis for incentive. To encourage con- 
tractors to strive for reduced costs, the 
modified contract offered them a pre- 
mium of a substantial percentage of any 
money saved by cutting actual costs be- 
low the initial estimate. 

The modified cost-plus, or bogey, con- 
tract, when applied to airplanes and en- 
gines during World War I, made it pos- 
sible for manufacturers to make rather 
surprising profits. The Packard Motor 
Car Company's contract for Liberty en- 
gines is a case in point. Government 
officials set the bogey price in advance 
at $6,087 per engine. With a 15-percent 
fee, the manufacturer received a profit 
of $913.05 per unit regardless of what 
the engines eventually cost. After it be- 
came apparent that actual costs would 
run somewhat less than originally esti- 
mated, the bogey was renegotiated down- 
ward to ^5,000 and the fee was reduced 
to 12.5 percent. Even so, Packard man- 
aged to earn a profit of $3,750,000 by 
bringing actual engine costs down to less 
than $3,200 per unit. But this was only 
one element of profit, for the contractor 
received in addition 25 percent of the 



savings or spread between the bogey and 
the actual costs. 9 

All together, in fees and premiums, the 
Packard Company would have earned 
just under $6,500,000 profit had the con- 
tract run to completion. And this, it 
should be understood, was a contractor 
with somewhat less than $6,000,000 in- 
vested in the plant turning out the en- 
gines. Nor were these profits an isolated 
exception. The Dayton- Wright Airplane 
Company, which manufactured the only 
tactical aircraft to go into mass produc- 
tion in the United States during World 
War I, was in a position to pile up more 
than $6,000,000 in profits from fees and 
premiums on a bogey contract even 
though the corporation's invested capi- 
tal only amounted to about $1,000,000 
supplemented by an advance of $1,500,- 
000 from the government. 10 

Just before the end of the war, public 
disclosure of apparently excessive profits 
on air materiel helped to provoke a re- 
vulsion to the whole principle of cost- 
plus contracts for military procurement. 11 
In Congress this attitude was reflected in 
charges of profiteering leveled at con- 
tractors and financial profligacy on the 
part of responsible public officials. The 
War Department suffered savage attacks 
from the floor of the House, which usu- 
ally charged scandalous waste in the con- 



» C. E. Hughes to Atty Gen, 25 Oct 18, Hughes 
Rpt, in Cong Red, December 30, 1918, pp. 906-07. 
1° Ibid. 

11 S. M. Brannon, JAGD, Discussion of the Legal 
and Contract Phases of Procurement Planning, for 
ASW Conference of Planning Branch Officers, 13 
Nov 34, in ICAF doc file, Contracts. Actually the 
estimated scale of profits shown were not in every 
case realized because of termination or renegotiation, 
but the cost-plus principle was discredited in the 
public mind regardless of subsequent changes. 



84 



BUYING AIRCRAFT 



tracting procedures of the War Depart- 
ment. 12 Without question there was 
waste in the wartime contracts for air- 
craft, but a good deal less than half of 
the money spent for air materiel— air- 
planes, engines, and accessories— used the 
cost-plus contract and its variants. 13 
Much of the waste was inherent in the 
compulsions of war regardless of the con- 
tract form employed. Nevertheless, the 
cost-plus contract was a dog with a bad 
name that Congress would not forget. 

Something of the congressional reac- 
tion to the procurement experience of 
1917-18 is evident in the report of a com- 
mittee investigating wartime expendi- 
tures. This committee recommended 
abolition of the cost-plus contract even 
for use in wartime, and urged Congress 
to revoke the power of the Secretary of 
War to suspend competitive bidding dur- 
ing emergencies as provided in the Re- 
vised Statutes, Section 3709. 

Finally, the committee actually asked 
Congress to amend Article III of the Con- 
stitution so as to stretch the definition of 
treason to cover profiteering on war con- 
tracts. After World War I, procurement 
officers of the War Department had to 
begin their normal peacetime operations 
in an atmosphere of distrust. Over their 
heads hung the threats of irate congress- 
men urging the Department of Justice to 

12 See, for example, the charges of Representative 
W. J, Graham of Illinois, chairman of the postwar 
committee investigating wartime expenditures. His 
claim that the War Department spent a billion dol- 
lars on aviation and failed to put a single fighting 
aircraft on the front before the armistice is simply 
not true. Cong Red, June i, 1920, pp. 8144-51. 

13 Hughes Report, Cong Red, December go, 1918, 
p. 885. Of approximately $100,000,000 spent for air 
materiel, $57,000,000 went out under fixed-price con- 
tracts and some $43,000,000 went out under modified 
cost-plus contracts. 



bring to book those responsible for war- 
time losses. 14 

Procurement Under the 
General Statutes 1918—26 

The alleged war scandals, as one man- 
ufacturer called them, colored procure- 
ment practices for a number of years 
afterward. The sins of the parents set 
the teeth of the children on edge. Prc> 
curement officers, fearing investigation, 
were inclined to insist upon public ad- 
vertisement and competitive proposals, 
with awards to the lowest bidders. By 
following the most stringent provisions 
of the statutes and avoiding the discre- 
tionary exceptions, they apparently hoped 
to safeguard themselves. 15 

In some cases, of course, there was no 
escape from the use of discretion. When 
a manufacturer turned up with a new 
design that promised revolutionary im- 
provements in performance, War De- 
partment officials had no alternative but 
to negotiate with the manufacturer in an 
attempt to agree upon a mutually satis- 
factory price. It would be impossible 
for the government to call for competi- 
tive bids on a design the government did 
not yet possess. 

Contracts for experimental airplanes 
were thus negotiated, but almost all other 
contracts, especially those calling for air- 
planes in production quantities, were let 

14 House Rpt 816, 66th Cong, 2d sess, April 1, 1920. 
Congress did not accept all the committee's recom- 
mendations. The National Defense Act of 1916, as 
amended through 4 June 1920, continued to author- 
ize the President in time of war or when war was 
imminent to place contracts without regard to the 
existing statutes (Section 120). 

15 For manufacturers' protests on this situation, see 
Lampert Hearings, pp. 1505-06 and 1404. 



PROCUREMENT LEGISLATION, ORGANIZATION, ADMINISTRATION 85 



upon a competitive basis according to 
the provisions of the statutes. The Air 
Service spent about $22,000,000 for air- 
craft in the five-year period 1920-24. Of 
this, less than $3,000,000 went for the 
design and development of new types. 
The spread between the two figures in- 
dicates the large amount expended on a 
competitive basis for items in quantity 
in contrast to the relatively small sum 
involved in negotiated contracts for ex- 
perimental items. 16 

Strict compliance with the statutes gov- 
erning procurement wrought a number 
of harmful effects entirely unintended by 
those who framed the laws. The case of 
the Martin bomber in 1919 and 1920 il- 
lustrates some of the unexpected evils 
stemming from an insistence upon price 
competition. During World War I, 
Glenn L. Martin worked to perfect a 
superior bomber. The War Department 
acquired the design rights by purchase. 
In 1919 the bomber appeared to be the 
most promising aircraft of its kind in the 
field. Air Service officers planned to pro- 
cure 200 units, but they did not invite 
Martin to negotiate privately on a satis- 
factory price. Instead, they put the de- 
sign out to open competition. When the 
bids were unsealed it was discovered that 
the Curtiss Aeroplane and Motor Com- 
pany rather than Martin quoted the low- 
est price. Two other firms received in- 
crements of the order, but Martin, the 
designer, received no contract at all be- 
cause he had increased his bid on the 



16 Gross expenditures for the period are from Lam- 
pert Report, page 3. Experimental expenditures are 
from testimony of G. C. Loening, based on data in- 
serted in the Congressional Record, January 7, 1925, 
by Representative F. La Guardia (Lampert Hear- 
ings, page 455). 



production order to amortize the losses 
he incurred during the initial trial and 
error experimental phase. Rival firms, 
with no such costs to cover, were in a 
position to bid lower. 17 

The evil consequences of a rigid resist- 
ance upon competitive bidding appeared 
abruptly. Deprived of his airplane, Mar- 
tin no longer had any incentive to im- 
prove that particular design. Worse yet, 
deprived of a profitable production con- 
tract as a means of reimbursing his earlier 
investment, Martin was soon unable to 
finance further development work. 18 The 
statutes intended to protect the public's 
interest here operated to the reverse effect 
and retarded the pace of research and de- 
velopment. 

A sequel only served to confirm the 
point that aircraft contracts made under 
the general procurement statutes discour- 
aged the designer and tended to drive 
him out of business. Some time after 
the ill-fated Martin bomber affair, the 
Navy's Bureau of Aeronautics negotiated 
an experimental contract with Curtiss to 
build a torpedo-carrying scout-bomber 
with performance (in terms of range, ceil- 
ing, speed, and load) well in advance of 
current aircraft. The design proved dif- 
ficult to execute. Curtiss pioneered in 
the use of new metal alloys to combine 
strength for bomb carrying with light- 
ness for range. After two years of engi- 
neering endeavor the Curtiss staff turned 
out a superior aircraft, the CS-2, but the 
effort absorbed $180,000 over and above 
the contract price negotiated with the 
Navy. When the Navy sought to pur- 
chase forty such aircraft from Curtiss, the 



17 Morrow Hearings, p. 1438. 

18 Ibid., p. 1440. 



86 



BUYING AIRCRAFT 



company quoted a price calculated to re- 
coup the firms' loss during the experi- 
mental phase. The Navy's cost analysis 
experts calculated that the Curtiss bid 
was several thousand dollars higher a 
unit than it should be. Unable to agree 
upon a suitable figure, the Navy put the 
design out to competition, and Martin 
won with a low bid at $23,000, a figure 
free from the burden of amortization 
that increased the Curtiss bid. 19 

Although it so happened that in un- 
derbidding each other for production 
contracts Curtiss and Martin may have 
achieved a certain rough justice, there 
were instances under the existing pro- 
curement statutes where the designer 
who failed to get a production contract 
to amortize his losses had to go out of 
business. 20 What is more, the operation 
of the general procurement statutes had 
still more unfortunate consequence. 
When the government procured a design 
for a new or experimental aircraft in a 
negotiated contract, the assumption was 
that the designer had turned over a set 
of drawings, calculations, and specifica- 
tions, which could be used as the basis 
of a competition for the production con- 
tract. As a matter of fact, no drawings 
of experimental aircraft were ever quite 
so complete. Invariably a good deal of 
shop practice was implicit in the draw- 
ings. Symbols and endorsements upon 
the drawings that might mean much to 
the staff of the designer were meaning- 
less when handed over to a rival firm 
chancing to bid low on a production 
order. 21 No one realized this more than 



19 Lampert Hearings, pp. 1144-45; 1404-05; 16*8- 

20 Morrow Hearings, p. 1439. 

21 Lampert Hearings, pp. 1401-08. 



the Curtiss and Martin engineers who 
tried to build each other's designs. In 
fact, Martin appreciated this difficulty so 
acutely that he ignored the CS-2 draw- 
ings entirely and had his engineers make 
up a completely new set of drawings 
that Martin shopmen would understand. 
Using a physical sample of the Curtiss 
CS-2 rather than Curtiss blueprints, the 
Martin engineers designed the whole air- 
craft anew, introducing changes where it 
seemed advisable and even running an 
entirely new stress analysis on the de- 
sign. 22 The finished product was quite 
literally a new aircraft. 

Here was the ultimate futility: a close 
adherence to the general procurement 
statutes by the military services led air- 
craft manufacturers into a dog-eat-dog 
era of destructive competition that penal- 
ized the very firms doing most to advance 
the art. Manufacturers who redrafted 
each other's designs for production in 
quantity were engaging in a costly dupli- 
cation of effort to be condemned on the 
score of waste alone, not to mention the 
absurdity involved. And in addition, as 
the manufacturers themselves admitted, 
no contractor pushed vigorously to im- 
prove a design in the hands of a rival. 2 * 
Officials in the War Department were 
well aware of this situation even before 
the CS-2 case came to prominence. 
Wherever possible, they took steps to 
remedy the difficulty. 

Protests From the Aircraft Industry 

Of all the complaints the aircraft man- 
ufacturers leveled against the procure- 



ss Ibid., pp. 2378-79, 2282. 
23 Ibid., p. 2281. 



PROCUREMENT LEGISLATION, ORGANIZATION, ADMINISTRATION 87 



merit procedures of the government, none 
reflected such ire as the charge that fed- 
eral contracting officers failed to respect 
design rights as proprietary. This, the 
manufacturers contended, was an issue 
of the first importance. 24 From this un- 
happy practice, the manufacturers be- 
lieved, stemmed many if not most of the 
other ills besetting the industry. 

While most manufacturers were quick 
to place the blame for the ills of the in- 
dustry upon the shoulders of federal con- 
tracting officers in general and their pro- 
curement procedures in particular, there 
were some few who recognized that at 
least a part and perhaps most of the trou- 
ble experienced by the industry came as 
a result of overexpansion during the war 
years. But whether excess capacity from 
overexpansion or faulty procurement 
procedures lay at the root of the trou- 
ble, everyone seemed to agree that the 
aircraft industry was heading for the 
rocks. The Aeronautical Chamber of 
Commerce in 1924 found the industry 
dwindling to the point where it would 
soon "cease to exist." 25 Howard Coffin, 
wartime head of the Aircraft Production 
Board, reiterated his report of igig when 
in 1925 he urged immediate action "to 
prevent a vitally necessary industry from 
entirely disappearing." 26 Others sang 

54 Rpt o£ the Special Com of the Aircraft Industry 
to the Members of the Industry, January 5, 1985, 
signed by representatives of virtually all leading air- 
craft manufacturing firms. (Reprinted in Lampert 
Hearings, pp. 1369-71.) Almost every manufacturer 
appearing before investigating committees at one 
time or another voiced the protest. 

25 Aircraft Yearbook, 1924, p. 1, 

29 Lampert Hearings, p. 12 ig. For the full text of 
the Report of the American Aviation Mission, July 
ig, 1919, called the Crowell Report, in which the 
condition of the aircraft industry in the United States 
is reviewed, see ibid, pp. 122 1-35. 



the same refrain in calling for reforms 
in the procurement practices of the gov- 
ernment where aircraft were concerned. 

The wails of protest raised by disgrun- 
tled manufacturers undoubtedly helped 
bring about the appointment of the Lam- 
pert and Morrow investigating groups. 27 
Both boards considered, among all the 
other aspects of aviation, the broad ques- 
tion of federal procurement policies re- 
lating to aircraft. They gathered exten- 
sive evidence from manufacturers and 
government officials alike and spread 
upon the record a large number of pro- 
posals for reform. 

Among the manufacturers there was 
general agreement as to the ills of the 
industry. Rightly or wrongly, they at- 
tributed the trouble to the failure of the 
government to regard designs as propri- 
etary, to a lack of continuity of orders, 
to the destructive pricing policies of con- 
tracting officers, and to the competition 
of government factories. In identifying 
these evils the industry spoke almost with 
one voice. But making complaints and 
proposing specific correctives are two en- 
tirely different matters. When faced 
with the opportunity of suggesting con- 
crete proposals, the members of the Aero- 
nautical Chamber of Commerce merely 
listed their criticisms and then side- 
stepped the question of detailed recom- 
mendations with the comment that any 
method of procurement overcoming the 
ills listed would be acceptable to the in- 
dustry. 28 Possibly the manufacturers 
realized that any legislation they as a 
group proposed for the revision of pro- 

27 Ibid., pp. 45-57. 

2B Reply of Aeronautical Chamber of Commerce 
to questionnaire of Morrow Board, October g, 1925, 
in Morrow Hearings, p. 1415. 



88 



BUYING AIRCRAFT 



curement procedures might well be en- 
acted. Then, if the revisions proved un- 
workable in practice they would be in a 
poor position to complain. Possibly they 
came to the realization that the problem 
was infinitely complex. 

Perhaps no one should have appreci- 
ated the complexity of the aircraft pro- 
curement question more completely than 
Howard Coffin, whose wartime role had 
plunged him into the very midst of the 
question. Congress, he declared, had 
hitherto placed too much reliance upon 
"curbstone opinions." Having said this, 
Coffin proceeded to deliver a curbstone 
opinion. Even while admitting that he 
was not prepared to make any very pro- 
found analysis of the question, he urged 
Congress to pass legislation permitting 
the allocation of production contracts to 
a small group of manufacturers arbitrar- 
ily selected as the best qualified. This, 
of course, was a revolutionary proposal 
that would do away with the requirement 
for competitive bidding, but Coffin of- 
fered no suggestion as to how it could 
be achieved without raising the cry of 
favoritism. 29 In a similar vein Grover 
C. Loening, an aircraft manufacturer and 
pioneer designer, favored legislation to 
permit a "parceling out" of contracts to 
the established firms maintaining re- 
search staffs, provided it could be done 
without "too much wet-nursing." He 
too had no suggestions as to just how 
this could be accomplished. 30 

Glenn L. Martin favored limiting com- 
petition to those firms with adequate fa- 
cilities. The decision as to just which 
firms were so qualified Martin would 



89 Lampert Hearings, pp. 1336, 1250, 1264. 
30 Ibid., pp. gis-13, 922. 



leave to the discretion of the contracting 
officers. No legislation would be re- 
quired, he felt, provided Congress as well 
as the Secretaries of War and Navy could 
be made to understand why such discre- 
tionary powers were necessary. 31 There 
was much to be said for Martin's reluc- 
tance to draft fresh legislation. As one 
witness told investigating congressmen, 
"new laws search folk's corns out like 
new boots.'' 32 Nonetheless, whether one 
followed Coffin and Loening in a legisla- 
tive solution or Martin in an administra- 
tive one, the objective was the same. 
Each favored enhanced discretionary 
powers that would allow contracting of- 
ficers to limit the competition for gov- 
ernment contracts to a select group of 
manufacturers and, where desirable, per- 
mit the allocation of contracts to particu- 
lar firms. 

The manufacturers' spokesmen were 
not alone in advocating increased powers 
for contracting officers. One government 
official after another testified in favor of 
giving a broader range of discretion to 
the Secretaries of War and Navy in the 
procurement of aircraft. Even while ad- 
mitting the danger of favoritism, Assist- 
ant Secretary of War D. F. Davis urged 
that the proprietary rights of manufac- 
turers be respected and some means 
found to give production orders to de- 
signers—to help them amortize their ex- 
perimental costs— without resort to com- 
petitive bids. 33 The Assistant Secretary 
of the Navy, Theodore Roosevelt, Jr., 
echoed the idea, pointing out that the 
statutes governing procurement were de- 



31 Ibid., p. 2279. 

m Ibid., p. 833. 

33 Ibid., pp. 659, 680. 



PROCUREMENT LEGISLATION, ORGANIZATION, ADMINISTRATION 89 



signed to preserve the public funds, but 
that it would be a poor economy indeed 
to preserve the public purse at the ex- 
pense of adequate aerial defenses for the 
nation. 34 The Secretary of the Navy was 
most emphatic: "The principle of com- 
petitive bidding is not adapted to air- 
craft in the present state of the art." 35 
In light of the unanimity of opinion 
among industrialists and federal officials 
regarding procedures for aircraft pro- 
curement, it is perhaps not surprising 
that both the Lampert Committee in 
Congress and the President's appointees 
on the Morrow Board advocated a dras- 
tic and even revolutionary change in the 
laws governing the procurement of air- 
craft. Both groups recommended legis- 
lation that would amend the existing 
statutes so as to recognize the manufac- 
turer's proprietary interest in his designs 
and permit the purchase of air materiel 
without competitive bidding. These 
were radical proposals in complete defi- 
ance of the historic statutory safeguards 
on public purchasing, but there was good 
reason to believe they would be enacted 
when the Sixty-ninth Congress met and 
began to consider legislation on aviation 
matters early in 1926 since nearly every- 
one concerned with aircraft procurement 
officially or unofficially seemed to favor 
the suggested changes. 36 



** Ibid., p. 2345. For an excellent exposition of 
why the Air Service wished to place contracts with- 
out competition, see testimony of Maj. Gen. M. M. 
Patrick, Chief of Air Service, January 27, 1926, in 
Hearings before the House Military Affairs Com, 
69th Congress, 1st session, January 19 to March 9, 
1926, pp. 287-89. 

33 SN to Judge Denison, 17 Nov 25, in Morrow 
Hearings, p. 1734. 

** The Comptroller General was an important ex- 
ception. Although the War and Navy Departments 




General Patrick 



The Air Corps Act of 1926 

Section 10 of the Air Corps Act of 1926 
prescribed an elaborate procedure for the 
procurement of aircraft. 37 Its first sub- 
sections— 10a to loi— provided for design 
competitions to encourage the develop- 
ment of aircraft. They required the Sec- 
retary of War and the Secretary of the 
Navy to advertise in at least three avia- 
tion periodicals inviting sealed bids con- 
taining not only a graduated table of 



had signed an agreement with the Aeronautical 
Chamber of Commerce promising to "sustain the 
principle of proprietary design rights," he abstained 
from ruling on the matter until a specific case came 
up. Until he did rule on the question, the agree- 
ment of the departments and the representatives of 
industry was relatively meaningless. See testimony 
of C. L. Lawrence, president of Aeronautical Cham- 
ber of Commer ce, in Morrow Hearings, p. 1416. 

37 See lch. iffl above, for the influence of the act on 
air strength. 



90 



BUYING AIRCRAFT 



prices on varying quantities of aircraft 
but, in addition, an aircraft design for- 
mulated to meet the rather general speci- 
fications laid out in the invitation to bid 
—or the circular proposal, as it was com- 
monly called. Moreover, Section 10 of 
the act specified a technique of evalua- 
tion by which a board, acting for the 
Secretaries, assigned a figure of merit ex- 
pressed in percentiles on each feature of 
the design. 

The design competition feature of the 
Air Corps Act was an outgrowth of a pro- 
cedure favored by Representative Mc- 
Swain, a most active member of the 
House Military Affairs Committee. By 
this device the congressman hoped not 
only to stimulate the inventive genius of 
the country but also to protect the pub- 
lic from abuse. Every phase of the com- 
petition was to receive the fullest pub- 
licity. To assure the board's objectivity, 
its conclusions, expressed as numerical 
ratings, were to become a matter of pub- 
lic record and subject to challenge by 
losing competitors, who were provided 
with formal machinery of appeal. The 
design competition, McSwain hoped, 
would provide the government with a 
means of garnering the best in aeronau- 
tical advances without limiting the field 
to a few big aircraft firms. 

The act was not, however, intended to 
impair the established industry for the 
benefit of the struggling inventor. Sec- 
tion loj amounted to a "Buy American" 
provision. It stipulated that only native- 
owned and native-operated plants would 
be eligible for contracts to supply mili- 
tary aircraft. This did not prevent the 
departments from taking advantage of 
unique advances made abroad. Section 
10k, one of the most important of the 



act, authorized the Secretaries to pur- 
chase aircraft, parts, and accessories for 
experimental purposes in the United 
States or abroad, with or without com- 
petition. The provision gave the Secre- 
taries a power they had long exercised 
under a number of legal makeshifts. 

Section 10k flatly authorized negoti- 
ated contracts in the purchase of items 
for experimental purposes, a provision 
no one would dispute. In the years to 
follow, however, there was a good deal 
of discussion about the meaning of the 
rest of the subsection, which read: "if 
as a result of [experimental procurement] 
new and suitable designs considered to 
be the best kind for the Army or the 
Navy are developed, [the Secretary] may 
enter into contract, subject to the re- 
quirements of paragraph (j) ["Buy Amer- 
ican"] . . . for the procurement in quan- 
tity of such aircraft, aircraft parts or 
aeronautical accessories without regard 
to the provisions of paragraphs (a) to (e) 
[relating to design competitions]." The 
phraseology would appear to authorize 
the Secretaries to give a contract for an 
experimental aircraft without competi- 
tion and then follow it up by signing a 
negotiated or noncompetitive contract 
with the same manufacturer if it ap- 
peared that the experimental contract 
had resulted in a superior item desirable 
in quantity. This view is reinforced by 
the circumstance that although several 
provisions of the section are specifically 
excluded— Sections 10a to loe and ioj— 
there is no mandatory reference to a sub- 
sequent clause requiring competitive bid- 
ding under certain circumstances. Had 
this interpretation continued to prevail 
and had the Secretaries continued to feel 
free to negotiate contracts for production 



PROCUREMENT LEGISLATION, ORGANIZATION, ADMINISTRATION 91 



quantities following an initial experi- 
mental contract, many of the difficulties 
of the decade before "World War II might 
have been avoided. 

Sections 10I and lom reflect the deep- 
seated distrust Representative McSwain 
felt for negotiated contracts consum- 
mated behind closed doors. Section 10I 
provided for extensive government au- 
dits of contractors' books, so that even 
experimental contracts negotiated at the 
discretion of the Secretaries would be 
subject to public scrutiny as a check 
against abuse. Section 10m required the 
Secretaries to make annual reports to 
Congress revealing the names of all com- 
petitors, prices paid, and the like. A pro- 
vision, McSwain felt, that would provide 
"a printed record to be published to the 
world," and would stigmatize favoritism 
with publicity. 38 What McSwain did not 
then realize was that Section 10I bur- 
dened Congress with an executive func- 
tion it was ill-equipped to perform. 

Section loq is one of the most difficult 
features of the Air Corps Act to under- 
stand. On the surface it appeared clear: 
in procuring aircraft according to de- 
signs presented "prior to the passage of 
this act," designs that had been "reduced 
to practice" and found suitable, the Sec- 
retaries were authorized to negotiate con- 
tracts. The subsection, it would seem, 
merely permitted the departments to ex- 
clude from the mandates of the act those 
aircraft developed before the passage of 
the act. And so it was interpreted by all 
in authority after 1926. There is a good 
deal of evidence indicating that Congress 
may have had no such limited intent. 



38 House Rpt, 1395, June 7, 1926, to accompany 
H.R. 12471, 65th Cong, 1st sess, p. 5. 



During the discussions preceding the 
passage of the act, Representative Fred 
M. Vinson of Kentucky, who was then 
a member of the Committee on Military 
Affairs, undertook a detailed, item-by- 
item analysis of Section 10. In dealing 
with loq, he said: "This section would 
authorize the Secretary, when in his 
opinion the best interests of the Gov- 
ernment would be served, to contract for 
quantity production of aircraft upon de- 
signs . . . reduced to practice and found 
suitable for the purpose intended." He 
made no mention of any qualifying 
clause "prior to the passage of this act." 
Moreover, to show that he visualized loq 
as having general application, he went 
on to describe a hypothetical situation 
in which a manufacturer builds an air- 
craft with a markedly superior perform- 
ance the air arm simply must have. To 
advertise for competitive bids on such a 
design by the traditional statutes would 
be absurd since there would be no guar- 
antee that the low bidder could produce 
an airplane matching the performance 
of the original sample. Section loq, 
Vinson noted, would obviate this diffi- 
culty. 39 

There is further evidence suggesting 
that loq was intended to confer upon 
the Secretaries a continuing power to 
negotiate contracts for aircraft pre- 
viously reduced to practice by manufac- 
turers. Representative McSwain had dis- 
cussed the provision when it appeared 
in his earlier bills. Far from regarding 
it as a stopgap applying only to aircraft 
designed before the passage of the act, 
he described its operation at length, even 
to the point of stating that it might seem 



Cong Red, June 39, 1926, p. 12271. 



92 



BUYING AIRCRAFT 



out of harmony with the many safe- 
guards imposed in the other sections of 
the act. He declared that he expected 
the departments to use design competi- 
tion as the normal approach to procure- 
ment, although he admitted they might 
resort to 10k and loq legally. But, he 
added, if the authorities abused the 
privilege, he would be "the first man to 
rise" seeking to repeal or amend the 
act.? Pledges such as this would be 
quite unnecessary had loq applied only 
to those few aircraft designed before 
passage of the act, since its applicability 
would, under that interpretation, have 
expired almost immediately. 

All the evidence leads to the conclu- 
sion that the framers of Section 10 prob- 
ably intended to permit the Secretaries 
to procure aircraft without competition 
when the airplanes represented new de- 
signs that had been reduced to practice 
by manufacturers and had been proved 
superior in actual flight tests. What- 
ever may have been the intent of Con- 
gress, the bare wording of the act itself 
clearly limited the application of loq to 
designs presented before July 1926, and 
the Secretaries were prohibited from 
availing themselves of the powers they 
were intended to have. The wording 
was unfortunate because it impeded pro- 
curement for years to come and inhib- 
ited the development of aircraft for mili- 
tary use. Congressmen might be to 
blame for this legislative mischance, but 
the full text of the act was referred to 
the War Department for study, and there 
was ample opportunity to discover the 
disparity between what the congressmen 



40 Cong Red, June 10, 1926, p. 11113. See espe- 
cially, McSwain to Woodhouse, printed in full there. 



said in debate and the way the act actu- 
ally read. For want of an organization 
in the air arm adequately equipped to 
deal with legislation, the text of the act 
returned from the War Department with 
the approval of the appropriate offi- 
cials. 41 

There remains to be considered only 
one provision of the act. Section lot 
stipulated that whenever the Secretaries 
entered into contracts for aircraft, they 
were authorized to make the award to 
the bidder they determined to be "the 
lowest responsible bidder" that could 
satisfactorily perform the work required 
"to the best advantage of the Govern- 
ment." Only the President and the fed- 
eral courts could review the decisions of 
the Secretaries as to the awards, their in- 
pretations of the provisions of the con- 
tracts, and the subsequent administra- 
tion of the contracts. Section lot was 
revolutionary in that it granted the Sec- 
retaries a very large measure of discre- 
tion. Not the lowest cash bid but the 
lowest responsible bidder won the award, 
and the Secretaries were to make the de- 
termination free from the hampering 
threat of subsequent reversal by review- 
ing authorities. This was clearly to the 
advantage of the air arm and promised 
a solution for many of the troubles be- 
setting aircraft procurement in the years 
before 1926, provided always, of course, 
the incumbent Secretaries were willing 
to exercise their discretionary powers. 
But in lot, as in the previous subsec- 
tions, the officials of the War Depart- 
ment who gave their approval so readily 

41 See, for example, SW Davis to Representative 
James, and Chief of the Air Service, Gen Patrick, to 
James, June 22, 1926, approving sec. 10; both in 
Cong Red, June 29, 1926, p. 12278. 



PROCUREMENT LEGISLATION, ORGANIZATION, ADMINISTRATION 93 



failed to see the significance of one par- 
ticular word. The act read: "Hereafter 
whenever the Secretary of War . . . shall 
enter into a contract. . . ." 42 Did this 
mean in every case? If so, lot would 
appear to conflict with the provisions of 
10k and loq by requiring competitive 
bidding. Uncertainty on this point was 
to give a handle to subsequent interpre- 
tations that inconvenienced the air arm 
considerably. 

For good or for ill, the Air Corps Act 
of 1926 became the basic law of the air 
arm and Section 10 determined the forms 
of procurement for nearly two decades. 
In retrospect, what precisely were the 
objectives of Section 10? Perhaps the 
best statement of the aims behind the 
section were expressed by Representative 
J. J. McSwain, the measure's most active 
sponsor, as he looked back years later. 
His intention, he wrote, was to stimulate 
inventive ingenuity in America, protect 
the government from the evils of favor- 
itism, protect the government against 
unreasonable charges, and ensure the 
development of an adequate aircraft in- 
dustry as a national resource in time of 
war. 43 Surely all these objectives were 
present in the Air Corps Act, but they 
were not equally weighted. Price and 
performance received more considera- 
tion than did the health of the industry, 
not so much in the act itself but in the 
interpretations that soon grew up around 
the act. 



42 Italics supplied by author. 

43 Representative McSwain to President of Aero- 
nautical Chamber of Commerce, 5 Oct 33, app. C in 
Recommendations on National Aviation Policy, pre- 
pared for Howell Comm by ACC, 12 Sep 34, in AIA 
file 19. See also, Cong Red, June 29, 1926, p. 12270, as 
well as House Rpt 1395 on H.R. 12471, 69th Cong, 
1st sess, June 7, 1926. 



Whatever may have been the inten- 
tion of those who framed the act, its sig- 
nificance stems from the circumstance 
that it was, after all, the fundamental 
procurement law of the air arm. Re- 
gardless of intent or subsequent inter- 
pretation, somehow the Air Corps had 
to procure airplanes within the terms of 
the law as it stood on the books, for un- 
til World War II there was no legisla- 
tion enacted to alter Section 10 signifi- 
cantly. The success of the act hung 
largely upon its execution. 

The Organization of the Air Arm 
for Procurement 

A knowledge of the organizations con- 
trolling procurement in the air arm is 
essential to an understanding of the pro- 
curement process. The form or struc- 
ture of an organization tends to influence 
the conduct of the operations it under- 
takes, and where tours of duty are short 
and shifts in personnel are frequent it 
is the organization rather than the peo- 
ple in it that provides continuity. 

Several agencies were involved in pro- 
curement. Under the terms of the Na- 
tional Defense Act of 1920, the Chief of 
Staff and the Assistant Secretary of War 
occupied parallel positions. Where the 
former supervised military matters, the 
latter supervised procurement and pro- 
curement planning. While the two were 
expected to co-ordinate their actions, 
each was responsible in his own sphere 
and each had equal access to the Secre- 
tary of War. The chiefs of arms and 
services thus conducted their procure- 
ment operations under two heads: they 
looked to the Chief of Staff and his gen- 
eral staff sections for supervision in the 



94 



BUYING AIRCRAFT 



matter of requirements, both quantita- 
tive and qualitative, but they looked to 
the Assistant Secretary of War and his 
staff for supervision in the forms and 
methods of procurement to be em- 
ployed. 44 

Supervision by the Assistant Secretary 
of War involved a number of steps. It 
was his office that drafted and revised 
the Army Regulations pertaining to pro- 
curement, a contribution of considerable 
importance in overcoming the lack of 
uniform procedures that had vexed 
Army purchasing during World War I. 
In addition, his staff worked constantly 
to minimize dissatisfaction with the 
Army's procurement methods by hear- 
ing complaints from bidders and con- 
tractors. By reviewing contracts before 
approval to ensure compliance with ex- 
isting statutes and the various regula- 
tions of such executive arms as the 
Treasury and Labor Departments, the 
Assistant Secretary sought to prevent 
troubles before they developed. In gen- 
eral, the function of the Assistant Secre- 
tary was to ride herd on all those arms 
and services performing procurement 
functions. 45 Insofar as the air arm was 
concerned, the Air Corps Act of 1926 
altered this arrangement slightly by cre- 
ating an Assistant Secretary of War for 
Air.* 6 The statute left the duties of this 
office undefined, but in practice the in- 
cumbent advanced the interests of the 



41 Stat 764, sec. 5a, and 5 USCA 18a. 

45 The duties of the Assistant Secretary of War 
and the Office of the Assistant Secretary are denned 
in Army Regulation 5-5. See also the annual re- 
ports of the Assistant Secretary for 1937 and 1938 
for the OASW role in current procurement. 

46 Act of July 2, 19*6, sec. 9 (44 Stat 748), 5 USCA 
182a. 



air arm by providing an additional ave- 
nue to the Secretary of War. 

Thus, from 1926 on, the Chief of the 
Air Corps, as the head of one of the pro- 
curing arms and services, was the respon- 
sible officer who made decisions on mat- 
ters of air materiel procurement within 
the supervisory purview of the Assistant 
Secretary and subject, of course, to the 
final approval of the Secretary of War. 
To assist him, the Chief of the Air Corps 
maintained a staff known collectively as 
the Offic e, Chief of Air Corps (OCAC). 
I Chart il suggests the several routes by 
which problems confronting the air arm 
might be brought to the attention of the 
Secretary and illustrates the relative po- 
sition of the Air Corps in the hierarchy 
of the War Department. 

The Structure of OCAC 



Chart 2 



reveals that the staff of the 
Office of the Chief of the Air Corps was 
organized into functional units more or 
less corresponding with those of the Gen- 
eral Staff, although the units had differ- 
ent names. In addition, the Air Corps 
Board, the Air Corps Technical Com- 
mittee, and the Procurement Planning 
Board, serving as advisors to the Chief 
of the Air Corps, were in effect adjuncts 
of OCAC even though they did not sit 
in continuous session. 

In a sense, all the staff divisions of 
OCAC worked on planning, but primary 
responsibility for over-all planning for 
the Air Corps rested with the Plans Di- 
vision. Among the many projects under- 
taken by this division, those of particu- 
lar relevance to procurement concerned 
the preparation of war plans— the air 
arm aspects of the War Department's 



PROCUREMENT LEGISLATION, ORGANIZATION, ADMINISTRATION 95 



Chart 1— Organization Chart Showing Channels of Communication 
Between the Secretary of War and the Air Corps 





SECRETARY OF WAR 




. 1 





Assistant Secretary 
oF War 



Office of the 
Assistant Secretary 



(Procurement and Industrial 
Mobilization Planning) 



! A . 1 

I Assistant i 

I Secretary ' 

I of War ' 

' far Air 



All 




Other 




Arms 





Chief of Staff 



jenera 



Staff 



(All Other Military 
Matters) 



Chief of Air Corps 



Office, Chief of Air 
Corps 





All 




Other 

Services 





"color plans"— the formulation of re- 
quirements to meet these plans, and the 
drafting of legislation as a basis for con- 
gressional action in authorizing pro- 
grams." Although the organization chart 
suggests that the A1t Corps Board func- 
tioned in an advisory capacity to the 
Chief of the Air Corps, in practice it 
functioned as a service group to the 
Plans Division, turning out studies on 
doctrine, technical equipment, and poli- 
cies in general, including many bearing 



« For a view of Plans Division functions in prac- 
tice, at. differentia Led from the role assigned by direc- 
tive, see R&R, Actg Chief. Plans, to Exec, 23 Aug j8, 



in one way or another upon 
tion of procurement. 

In matters directly concerning pro- 
curement, the Supply Division of OCAC 
was the agency of primary concern. In 
one form or another and under different 
names from time to time, the organiza- 
tion for handling materiel questions in 
OCAC always posed a peculiar problem 
since the headquarters and all the other 
staff divisions of OCAC were in Wash- 
ington, while after 1936 the staff for ma- 
teriel was actually located at Wright 
Field at Dayton, Ohio, with only a small 
liaison section in Washington. 48 

5 See AAF Hist Study io, p. s 7 . 



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PROCUREMENT LEGISLATION, ORGANIZATION, ADMINISTRATION 97 



Just as the Air Corps Board served in 
practice as a special adjunct for the Plans 
Division regardless of what its directives 
might say, so too the Air Corps Techni- 
cal Committee and the Procurement 
Planning Board were closely related to 
the functions of the Materiel Division. 
Each of these special groups performed 
a co-ordinating function of particular 
importance. The Technical Commit- 
tee, with representatives from the Ma- 
teriel Division reflecting the engineer- 
ing and manufacturing point of view 
and representatives from the Operations 
Division defending the user's point of 
view, sought to resolve the conflicting 
objectives of these groups. The commit- 
tee's task was to make an acceptable or 
workable recommendation for the Chief 
of the Air Corps to use as a basis for his 
decision on materiel problems. 48 

The role and composition of the Pro- 
curement Planning Board were similar 
to those of the Technical Committee, 
but there the decisions to be reached 
were fiscal rather than technical. The 
board's central function was to try to 
match the funds available to the air- 
craft. In short, the board had to com- 
promise the desired with the possible. 50 
While the Technical Committee and the 
Procurement Planning Board did make 



■*» AR 850-25, as issued in the years before World 
War II, outlined the functions of technical commit- 
tees for the arms and services generally but left the 
mechanics of administration undefined. No ana- 
lytical history has been written to evaluate the role 
of the Air Corps Technical Committee before the 
war. 

50 For a discussion of the Procurement Planning 
Board, see Memo, Chief, Proc Sec, for Chief, Mat 
Liaison Sec, with Incl, 1 Jun 34, WFCF 334.8 Hear- 
ing 1935; and testimony of Brig Gen H. C. Pratt, 
February 14, 1934, House Hearings on WD appro- 
priations for 1935. 



recommendations that led to decisions 
issued in the name of the Chief of the 
Air Corps, the great bulk of the work 
relating to procurement came to Wash- 
ington from the Materiel Division at 
Wright Field. 

The Materiel Division 

The functions of the Materiel Divi- 
sion insofar as procurement was con- 
cerned may be explained by considering 
its five major sections. \(Chart jj| 

The operations of the Engineering 
Section were fundamental to the activi- 
ties of all the other branches, for it was 
from the various experimental aircraft 
and accessories sponsored by this section 
that the items subsequently procured in 
quantity were ultimately selected. The 
staff of the Engineering Section endeav- 
ored to keep itself informed about ad- 
vances in science and technology on 
every horizon in order to formulate pro- 
grams of experimental development re- 
sulting in superior air weapons. The 
Engineering Section initiated contracts 
with industry for the manufacture of 
experimental items, prepared specifica- 
tions to secure uniformity and accept- 
able quality where standardization was 
possible, and tested the prototype mod- 
els turned out by the contractors. Fi- 
nally, when users of finished equipment 
returned reports of unsatisfactory per- 
formance, the Engineering Section 
sought to rectify the shortcomings. The 
entire Materiel Division was short- 
handed in the decade before the out- 
break of war, but nowhere was the lack 
of skilled officers more acute than in the 
Engineering Section. For example, as 
late as 1937, there were only four proj- 








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Field Service 
Section 




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Mointenc 
Supply 


Aircraft M 
Bra 


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Air Corps 
representatives in 
factories working 
On Air Corps 
contracts 


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tn _C 

O v 
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PROCUREMENT LEGISLATION, ORGANIZATION, ADMINISTRATION 99 



ect officers in the Aircraft Branch to 
monitor all the various aircraft projects 
under way at that time. 

To the Procurement Section fell the 
actual business of conducting the pur- 
chasing operations of the Materiel Di- 
vision. Procurement Section officers 
drafted the circular proposals that were 
distributed to the aircraft industry. It 
was they who drew up the contracts, 
checked them for legal sufficiency, and 
negotiated with manufacturers over the 
terms to be included. If changes were 
required in the terms once the contract 
had been signed, it was the officers of 
the Procurement Section who helped 
process the necessary legal papers, and 
it was they who arranged for the inspec- 
tion of the final product before accept- 
ance. In the Procurement Section the 
shortage of officers was also chronic. De- 
spite the expenditure of more than 
$30,000,000 for air materiel in 1937, to 
consider but a single year, there was 
only one officer available at Wright Field 
to supervise the important function of 
inspection. Although there were more 
than a dozen officers carried on the Pro- 
curement Section roster, most served as 
resident representatives in the factories 
of manufacturers holding Air Corps con- 
tracts and only a few remained at Wright 
Field to conduct the involved operations 
centering there. 

Of the three remaining sections of the 
Materiel Division, the Industrial Plan- 
ning Section, which also played a vital 
role in the Materiel Division, will be 
treated in a subsequent chapter. 51 The 
Field Service Section performed the sup- 
ply and maintenance services of the air 



arm and thus is of marginal interest save 
insofar as the section initiated the pur- 
chase of spare parts, supplied informa- 
tion on requirements, and compiled the 
unsatisfactory reports that influenced the 
procurement process. The last section 
of the division to be accorded the status 
of a major unit was the Patent Liaison 
Section, a designation that is misleading 
since the staff of the section generally 
consisted of only one officer from the 
Judge Advocate General's Department. 52 
All five sections of the Materiel Divi- 
sion were located at Wright Field, an 
elaborate air base consisting of landing 
fields, hangars, workshops for handling 
maintenance and housing tests, labora- 
tories for conducting research and de- 
velopment work, and offices containing 
not only the files of contracts and re- 
lated correspondence but complete sets 
of specifications as well. A summary of 
the paper work turned out at Wright 
Field during 1938 indicates the scope of 
the administrative functions carried on 
by the division: over 63,000 copies of 
specifications were printed during the 
year for distribution to manufacturers; 
53,000 engineering change notices were 
mailed to contractors; nearly half a mil- 
lion pages were prepared to keep the 
Status of Equipment Book ever current, 
and the division's big machines turned 
out three miles of blueprints, for the 
most part consigned to manufacturers at 
work on contracts covering aircraft or 
accessories for the War Department. 53 



51 See |ch,Vlij below. 



52 The three preceding paragraphs are based on 
the following: Mat Div GO 6, 9 Dec 36, and Chief, 
Mat Div, to CofAC, 5 Nov 37, AHO Plans Div 145.91- 

m i - 

53 Annual Rpt o£ Mat Div, draft copy, 27 Aug 38, 
WFCF 32 1 .9 Annual Rpt 1 938. 



100 



BUYING AIRCRAFT 




Wright Field, 1935, Before Expansion 



Procurement of air materiel involved 
three echelons between the Secretary of 
War on the one hand and the manufac- 
turer who actually fulfilled a contract 
on the other. Each of the three— the 
Assistant Secretary and his staff, the 
Chief of the Air Corps and his staff, 
and the Chief of the Materiel Division 
and his staff— constituted a clearly de- 
fined administrative entity, different in 
location and personnel. Concerning the 
organization of these three echelons there 
need be no confusion, but the definition 



of their functions is by no means so sim- 
ple. The exact line of demarcation be- 
tween the three was not always clear. 
Where duties were assigned by statute— 
as for example in the Air Corps Act of 
1926, which required the Secretary of 
War to approve contracts purchased un- 
der its terms— there was no confusion, 
but where no statutory provisions were 
present there was a good deal of uncer- 
tainty and overlapping. Acute problems 
of co-ordination and command appeared 
on every hand to complicate procure- 




ment operations as officers in each of the 
several echelons tried to perform their 
duties. 

Problems of Co-ordination 
and Command 

One of the most important misunder- 
standings that troubled procurement op- 
erations grew out of the failure of air 
arm officers and general staff officers to 
reach a meeting of minds on doctrine 
regarding the tactical and strategic em- 



ployment of air power. So long as there 
was an Assistant Secretary of War for 
Air, the air arm could count on ready 
access to the department head, regard- 
less of the attitude of the General Staff. 
While this had certain advantages, it suf- 
fered the disadvantages of channeling 
problems past the Chief of Staff rather 
than through him— and problems he did 
not handle he could scarcely be expected 
to appreciate, let alone solve. 54 The 

M For a discussion of the problems in command 
raised by the existence of an Assistant Secretary of 



102 



BUYING AIRCRAFT 



decision of President Roosevelt in 1933 
not to appoint an Assistant Secretary of 
War for Air terminated the uncertainty 
in the chain of command induced by the 
existence of this official, but almost im- 
mediately a new dilemma appeared. 

During 1935 the War Department es- 
tablished the General Headquarters Air 
Force, which, in the minds of the air- 
men if not to all others in the Army, 
was to constitute a great concentrated 
striking force of strategic air power at 
the disposal of the high command. Even 
if this force turned out to be something 
less than great, and even if there were 
no complete accord in the matter of doc- 
trine, there could be no denying the 
importance attached to the quality of 
the aircraft procured to perform the spe- 
cial functions of this striking force. In 
such a situation there was need for the 
most proficient co-ordination possible be- 
tween the users (the GHQ Air Force) 
and the suppliers (the Air Corps). De- 
spite this obvious need for co-operation, 
the War Department created the GHQ 
Air Force not as a subordinate section 
of the Chief of the Air Corps but rather 
as a virtually independent command re- 
porting directly to the Chief of Staff. 
There were many reasons for making 
this arrangement, but none of them ob- 
viated the difficulties in the procurement 
process that resulted from the separation 
of users and suppliers. 55 Since the only 



War for Air, see testimony of Chief of Finance et al., 
in House Hearings on WD appropriation for 1935, 
January 26, 1934, pp. 59-60, 465-66, and Senate Hear- 
ings on same, March 12, 1934, pp. 27-28, as well as 
Baker Board Report, p. 66. 

55 For- a discussion of the various factors influencing 
policy regarding the chain of command for GHQ Air 
Force, see AAF Hist Study 10, passim. 



authoritative channel between the two air 
arms lay through the Chief of Staff, and 
since the airmen often believed this offi- 
cial to be unappreciative if not actually 
hostile to their concepts of air power, 
they regarded the arrangement as highly 
unsatisfactory. The experience of World 
War I, when the users, represented by 
the Division of Military Aeronautics, 
and the suppliers, represented by the 
Bureau of Aircraft Production, were 
similarly separated, gave ample evidence 
of the need for closer co-ordination than 
the existing organization could pro- 
vide. 56 

The problems of co-ordination and 
command that disturbed the function- 
ing of the air arm were by no means all 
external to the Air Corps itself. One of 
the most difficult questions, one that ap- 
peared again and again, was the matter 
of the relationship of the Washington 
headquarters to Wright Field— the rela- 
tionship of OCAC to the Materiel Divi- 
sion. For the first ten years after the 
passage of the Air Corps Act in 1926, 
the Materiel Division functioned on a 
bureau basis as an organic part of the 
Washington headquarters, though physi- 
cally located in Ohio. A small liaison 
staff remained in Washington to handle 
papers for the remote division, but this 
staff was a service agency only. 

During 1935 and 1936 criticism of the 
prevailing arrangement led to the crea- 
tion of a Supply Division in OCAC as 
the primary advisory agency on materiel 
for the Chief of the Air Corps. This 
removed the Materiel Division from its 



56 The precedent from World War I is treated at 
length in Holley, Ideas and Weapons, Chapter IV. 



PROCUREMENT LEGISLATION, ORGANIZATION, ADMINISTRATION 103 

Chart 4 — Composite Organization Chart Showing the Agencies Primarily 
Concerned With Air Materiel Procurement in the Two Decades 
After the Air Corps Act or 1926 



SECRETARY 
OF 
WAfi 



jr. 



Asiiitanl 



OfFl« f tht 

A III (ton ^Secretory 



i 



Assijront 
SecreTQiy * 
of Wot (Air) 
(1956-33) 



and 
ifnitteei 



Chief of 
A if Cotpi 



Materiel 
Lioison Office 



Chief of 
Materiel 

Division 



Procurement 
Section 



Enjineerirts 
Section 



Pfenning Section 



Resident repretentative* 
in factories of major 
contractors 



It 



Staff 



General 
Stan 1 



GHQ 

Air Force 




^ In 

^Washington 



Pawn I 
Liaiion Section 


Fiifd Service 
Section I 







IP 7 



At 

♦-WrisJit Field, 
Dayton, Ohio 



Procurement planning 
representative! in th* 



1 



VScotteisd 
Apt* 



Ait depots 



_i 'J r Narfon 



position as the advisory staff for the air 
arm on materiel matters and led to the 
anomalous situation in which the Chief 
of the Supply Division in Washington, 
a major, exercised more power and made 



more decisions than did the Chief of the 
Materiel Division, a brigadier general, 
at Wright Field. (Chart 4) After a 
year of this system, the Chief of the Ma- 
teriel Division moved to Washington to 



104 



BUYING AIRCRAFT 



assume his rightful role as primary ad- 
viser on air materiel matters, retaining 
both the Supply Division in Washington 
and the Materiel Division in Ohio with 
somewhat duplicating functions and a 
good deal of uncertainty regarding the 
exact responsibilities of each. 87 

As though the relationship of the Ma- 
teriel Division to OCAC were not a suffi- 
ciently complex problem in itself, in the 
mid-thirties a General Staff directive 
complicated the matter still further by 
ordering the Chief of the Air Corps to 
reactivate the Air Corps Technical Com- 
mittee, which had been allowed to fall 
into disuse. The prevailing Army Reg- 
ulation on technical committees for the 
arms and services in general left the pre- 
cise powers of the committees vague and 
ignored the special circumstances raised 
by the widely differing organizations 
upon which such committees were im- 
posed. The new Air Corps Technical 
Committee was to begin operations by 
confronting the Chief of the Air Corps 
with an interesting problem in com- 
mand: he had to determine between the 
relative merits of the recommendations 
of the Technical Committee on one 
hand and the Materiel Division on the 
other. 58 

As a result of organizational uncer- 
tainty and instability, the system for pro- 
curement was forever in flux. Officers 
were so occupied accustoming themselves 
to new administrative arrangements that 
they found little opportunity to perfect 



07 AAF Hist Study 10, pp. 55-58. 

58 TAG to Cof AC, 24 Oct 36, AFCF. See also AC 
Project Reds, folder 18, Policies, Procedures and Or- 
ganizations Governing Supply Functions of the Mat 
Div (Lyon Papers). 



the operation of the minor mechanics 
in the procurement system. The whole 
procedure for procurement never really 
became a well-oiled routine. This situ- 
ation was further complicated by the 
high rate of turnover in personnel. To 
acquire only the barest rudiments in the 
extremely technical area of administra- 
tion involved in monitoring an experi- 
mental engineering program, conducting 
aircraft design competitions, and negoti- 
ating contracts requires long years of 
training and experience. Rapid turn- 
over in personnel militated against the 
training of a highly proficient staff of 
procurement specialists save where civil 
service employees supplemented the mil- 
itary staff. 

Even if the philosophy implicit in the 
Army practice of assuming that assign- 
ment confers competence is correct, it 
must be recognized that the individual 
officer assigned to procurement duties, 
competent though he may have been, 
found the frequent shifts in organization 
confusing. And, as a result, few officers 
could be expected to understand the full 
implications of the operations they con- 
ducted. Thus, despite the well-nigh con- 
tinual search for improved organization 
and administration that marked the 
growth of the Air Corps in the decade 
before the war, there remained a number 
of inadequacies in the staff. 

Some Staff Difficulties 

Perhaps no single shortcoming of the 
air arm was more crucial than its appar- 
ent inability to handle legislation ad- 
vantageously. And the formulation of 
legislation, whether seeking enlarged ap- 
propriations or a revision in the statutes 



PROCUREMENT LEGISLATION, ORGANIZATION, ADMINISTRATION 105 



governing purchasing, was of central sig- 
nificance to procurement. 

Among the several staff divisions of 
OCAC, the Information Division might 
be expected to have played an active 
part in handling legislation for the Air 
Corps. It did not do so. The Informa- 
tion Division, as its name suggests, was 
an office for handling information, not 
for evaluating it. The use of the word 
information in place of intelligence in 
the division title is highly significant. 
The Military Intelligence Division of 
the General Staff, G-2, fought vigor- 
ously in the between-war years to pre- 
vent any encroachment upon its func- 
tions by the arms and services. For this 
reason OCAC never developed an agency 
to perform the intelligence function in 
the fullest sense of the word. As a con- 
sequence, the Information Division did 
little concerning legislation but main- 
tained a reference file of current bills 
and reports. There was no effort to pro- 
vide the air arm with strategic and tacti- 
cal intelligence concerning the highly 
important battles on Capitol Hill. At 
best, the Information Division before 
the war was scarcely more than a public 
relations office and a convenient refer- 
ence library for OCAC. 59 In general, 
all questions of legislation were referred 
to the Plans Division for consideration. 

No single unit of OCAC was more 
important than the Plans Division. 
Upon the division's officers hung respon- 
sibility for much of the creative plan- 
ning for the air arm. Unfortunately, 
the division also suffered from the usual 
shortage of personnel— as late as 1938 



50 AAF Hist Study 10, p. 26. 



there were only four officers assigned to 
this vital activity. 60 

There were able officers in the Plans 
Division, but ability alone was no sub- 
stitute for effective procedures in han- 
dling problems. Especially was this 
true in the involved business of legis- 
lation. Plans officers themselves were 
aware of the deficiencies in their office 
routine for dealing with legislation. 81 
They realized that some sort of system 
was essential since the number of bills 
churned out by a single Congress was 
often staggering. In one session, for 
example, Plans officers found themselves 
confronted with more than 140 bills to 
study, and, where the bills moved for- 
ward, they had committee reports and 
amendments in the House and Senate 
to watch with care and report upon. 62 

Plans Division officers tried to formu- 
late standing operating procedures for 
use in processing legislation, but there 
were no real specialists in the subject. 63 
In general, work on legislative matters 
was just an additional duty. When con- 
fronted with highly technical problems 
such as the legal aspects of procurement, 
Plans officers tended to look about for 
experts on whom to rely. In the matter 
of legal questions, with which procure- 
ment legislation abounded, perhaps not 
unnaturally the Plans officers turned to 
the lawyers most readily available, offi- 
cers with commissions in the Judge Ad- 
vocate General's Department assigned to 



so Ibid., pp. 36-38. 

Gl Memo, Actg Chief, Plans Div, tor CofAC, 28 
Dec 35, AHO Plans Div 145.91-31. 

02 Memo, Chief, Plans Div, for CofAC, 26 Nov 35, 
AHO Plans Div 145.91-31. 

«* OCAC Office Memo, 10-27, 18 Feb 36, AHO 
Plans Div 145.91-30. 



106 



BUYING AIRCRAFT 



the Patent Section of the Supply Divi- 
sion or the Materiel Division. The opin- 
ions rendered by these patent lawyers 
on the legal points raised in pending 
legislation on procurement, as one might 
suspect, frequently tended to be highly 
technical, narrowly defined, and legalis- 
tic. Without in any way disparaging 
the talents of the lawyers, their outlook 
was extremely cautious and, as the sub- 
sequent discussion of procurement leg- 
islation shows, the interests of the air 
arm were at times adversely affected as 
a result. Opinions legally sound might 
satisfy a judge but they leave a congress- 
man unmoved. For want of legislative 
specialists, air arm legislation suffered. 

There were civilian specialists on pro- 
curement at Wright Field, men widely 
familiar with the intricacies of procure- 
ment legislation, but Wright Field was 
far from Washington. When the Plans 
Division found it necessary to report on 
a measure before action by Congress, 
often there was no time to refer the mat- 
ter to the trained staff at Wright Field, 
and Plans officers had to act as best they 
could with commensurately inadequate 
results. 04 

The net result of these several circum- 
stances was to leave the Plans Division 
a faulty instrument for dealing with leg- 
islation, especially procurement legisla- 
tion originating outside the Air Corps. 
Throughout the prewar years there was 
an elaborate administrative hierarchy 
extending on down from the Secretary 
of War to guide procurement, but for 
all the achievements of these tiers of 



6 * See, for example, the action of OCAC on S. 215 
(the Logan Bill), 74th Cong, 1st sess, WFCF 334.8 and 
°3 2 > «935. passim. 



agencies, they were weak in at least one 
vital respect: they failed to establish 
adequate devices to deal with the essen- 
tially political problems underlying the 
procurement of air materiel. This cir- 
cumstance made the tasks of procure- 
ment officials immeasurably more diffi- 
cult. 

The Administration of Procurement 

An Air Corps study prepared in the 
mid-thirties, in an elaborate chart pur- 
porting to trace the exact formalities 
that resulted in the procurement of air- 
craft in quantity, described the chain of 
events that led from the idea for an air- 
craft to the finished product. 

First, a tactical unit initiated a re- 
quest for a new item of equipment. The 
request was then studied by the Air 
Corps Board, where the idea was con- 
sidered in terms of its relationship to 
doctrine. On the basis of this analysis, 
the Air Corps Technical Committee 
propounded a statement of military 
characteristics— desired attributes such as 
speed, load, range, armament— which the 
committee sent to the General Staff for 
approval. If the General Staff found 
the proposed statement of military char- 
acteristics acceptable and within the 
scope of official Army doctrine, the ap- 
proved paper was returned to the Tech- 
nical Committee, where a development 
project was officially set up and the En- 
gineering Section of the Materiel Divi- 
sion was authorized to procure a design 
either by direct purchase or by holding 
a design competition as prescribed in 
Sections loa-ioi of the Air Corps Act. 
If the resulting design was approved by 
the Technical Committee, the Engineer- 



PROCUREMENT LEGISLATION, ORGANIZATION, ADMINISTRATION 107 



ing Section proceeded to purchase an 
experimental item with the assistance of 
the Procurement Section. If tests by the 
Engineering Section showed the experi- 
mental item to be acceptable, it was 
approved for trial. Then, if the Gen- 
eral Staff and the Assistant Secretary of 
War gave their assent, the Procurement 
Section prepared a contract for a service 
test quantity, that is, the number of air- 
craft deemed necessary to secure an ade- 
quate test of tactical suitability in the 
field. This number ranged from three 
or four to a full squadron of thirteen or 
more depending upon the type of air- 
craft and the novelty of its design. 
When the tactical unit in the field com- 
pleted its service test, its recommenda- 
tions went to the Technical Committee 
where, if the evidence warranted, a de- 
cision was made to recommend the air- 
craft for standardization, another way of 
saying that the committee recommended 
the aircraft for purchase in quantity. 
If the General Staff and the Assistant 
Secretary of War approved, the Engi- 
neering Section recorded the design in 
its book of standards and, when funds 
became available, the Procurement Sec- 
tion proceeded to procure in quantity. 

The elaborate ritual described may 
look very official and impressive, but it 
is doubtful if any airplane ever followed 
the route there prescribed. The speci- 
fied procedure, like most complicated 
prescriptions, does not reflect reality. It 
is at once too simple and too complex. 
It does not begin to show the many con- 
currences and authoritative approvals 
required at stages along the way. The 
purchase of an experimental item was 
never a simple matter between the Engi- 
neering and Procurement folk at Wright 



Field. With a formal development di- 
rective in hand from the Technical 
Committee, it was still essential to se- 
cure the approval of a number of other 
officials such as the budget officer. 65 
And even after a contract had been ne- 
gotiated, it did not become valid until 
forwarded to the Chief of the Air Corps 
who, by law, had to secure the approval 
of the Secretary of War. 

On the other hand the route set forth 
in the Air Corps study is idealized and 
unrealistic in that it prescribes a proce- 
dure far too regular and stereotyped. 
In practice many of the steps were 
omitted. The functions assigned to the 
Technical Committee, for example, were 
often taken over by the Chief of the Air 
Corps relying upon advice from the Ma- 
teriel Division, and more often than not 
ideas for new aircraft originated else- 
where than with the tactical units. 66 
Yet, for all of these discrepancies, the 
study illustrates clearly, if perhaps im- 
perfectly, how much emphasis air arm 
officials placed upon authorization and 
co-ordination. 

Procurement officials, living always in 
the shadow of congressional investiga- 
tion, were particularly insistent upon 
getting formal authorizations and ap- 
proval of their decisions by higher au- 
thority. They were equally zealous in 
co-ordinating with all appropriate agen- 



« 3 See, for example, Actg Chief, Mat Div, to Cof AC, 
16 Mar 35, WF Proc and Contract files, 360.01. See 
also, Materiel Division study concerning develop- 
ment, standardization, and procurement planning . . . 
[1936], AF Documentary Reference and Research Br, 
document file, Doc 13/US/14. 

66 For a rather different version of the route from 
idea to aircraft, see Mat Div Bull No. 30, 30 Aug 35, 
AF Doc Reference and Research Branch doc file, 
Doc 13/US/11. 



108 



BUYING AIRCRAFT 



cies. Co-ordination, as any staff officer 
knows, all too often means getting a sig- 
nature scratched upon a document even 
though the signer has little idea of its 
contents. Officials concerned with pro- 
curement repeatedly issued directives 
perpetuating and even enlarging the 
practice since officers in each echelon 
hoped to spread responsibility as broadly 
as they could and if possible shed it en- 
tirely either up or down the line in the 
event of a kickback. 

Some of the required co-ordinations 
and approvals were entirely necessary, 
but whether they resulted from necessity 
or from a desire to provide self-defense, 
the number of steps in the processing of 
paper work for procurement seemed al- 
ways to grow greater. As a result, the 
already inherently complex pattern of 
procurement tended to consume increas- 
ingly longer periods of time between the 
inception of a design and the day when 
it reached mass production. 

By the end of 1937 the average time 
lapse between idea and aircraft was five 
years. At least six months went into the 
formulation of specifications for an air- 
craft desired to meet a particular tacti- 
cal need. One or two years more passed 
during the development of an experi- 
mental item for evaluation, which was 
itself a time-consuming process. Service 
tests by tactical units often required an- 
other six months to two years, and at 
every step in between these operations 
there were delays of greater or lesser 
duration as papers shuttled through the 
in and out baskets at each staff echelon. 67 



Five years was only an average figure. 
Actually, the elapsed time varied widely 
depending upon the particular form of 
procurement involved, for the time re- 
quired to conduct a formal design com- 
petition was obviously far greater than 
that required to buy an aircraft already 
perfected by a manufacturer and avail- 
able for purchase on a sole source basis. 68 

One prolific source of delays lay in 
the change orders frequently encoun- 
tered in contracts for experimental air- 
craft. When in the course of such a con- 
tract the manufacturer devised changes 
in design or construction that improved 
the product, the government's interest 
was clearly served if the improvement 
could be incorporated, regardless of the 
specifications. But who was to pay for 
such modifications? While the contrac- 
tor was always anxious to improve his 
product, there was a limit on the num- 
ber of changes he could undertake 
without running his costs above the 
price set in his contract. Where air arm 
officials felt the proposed modification 
was not only desirable but essential, they 
would consent to a change order that 
virtually amounted to an amendment of 
the contract, providing for agreed upon 
increases in the manufacturer's compen- 
sation to cover the cost of the variation 
over the original specification. 

Air arm officers believed that contrac- 
tors abused the change order privilege 
on occasion. A contractor could bid 
low in his initial response to a circular 
proposal, then, having won the contract, 
he could proceed to recoup the losses 
inevitable on his low bid by persuading 



67 CofAC, Lecture, Current Procurement and Al- 
lied Problems, Army Industrial College, 11 Dec 37, 
ICAF files, 



88 ESMR 50-101, 31 Oct 34, WFCF, 008 Policy: 
Procurement. 



PROCUREMENT LEGISLATION, ORGANIZATION, ADMINISTRATION 109 



procurement officers to allow him a num- 
ber of change orders each with its allow- 
ance of increased compensation. To off- 
set the temptation presented by this 
possibility, the officials who negotiated 
change orders surrounded them with 
nearly all of the elaborate procedures 
of a contract itself. Since a change or- 
der involved an expenditure of funds, 
approval of the highest echelons of au- 
thority was required. The net result 
of all these formalities was an increase 
in the time between the signing of an 
initial contract and the delivery of the 
first item. But paper work, the neces- 
sity of securing formal approval and the 
desired co-ordination, was not the only 
cause of delay growing out of change 
orders. There was an element of delay 
inherent in the negotiation itself. Pro- 
curement officers were particularly on 
guard against the efforts of manufac- 
turers to increase prices unduly by this 
backdoor route, and in pursuit of this 
end they ran headlong into manufac- 
turers with precisely the opposite inten- 
tion." 9 Since anticipated costs in any 
proposed modification were hard to es- 
timate, the negotiators for the two dif- 
ferent interests were sometimes com- 
pletely unable to agree upon a figure. 
Meanwhile, precious time sped past and 
the gap between idea and completed air- 
craft grew larger and larger. 

The gap between drawing board and 
flying field may not have been of criti- 



K9 For an interesting example of a manufacturer's 
attitude on change orders, see testimony o£ J. L. 
Callan, January 28, 1925, in Lampert Hearings, p. 
i49gff. For restrictions placed on the free use of 
change orders, see AC Policy 133 in Digest of Policy, 
9 Apr 37, AFCF 161. See also, CofAC to Chief, Mat 
Div, 13 Dec 35 and 23 Mar 36, AFCF 161. 



cal importance in peacetime, but in war 
victory might hinge upon an ability to 
reduce the span appreciably. The na- 
tion that can create new aircraft rapidly 
and then inject modifications on the as- 
sembly line with a minimum of delay 
and confusion obviously has the advan- 
tage. Insofar as procurement officials 
delayed the process of modification by 
encumbering it with legalistic require- 
ments and formalities, they set up stum- 
bling blocks that would one day have 
to be removed when the nation went to 
war. The rigid time-consuming contrac- 
tual formalities that grew up in peace- 
time were utterly unsuited for the de- 
mands of war. 

At best, the progression from idea to 
aircraft was a difficult journey. It would 
have been difficult in a long-established 
organization where each office was 
manned by highly skilled specialists with 
years of experience. How much more 
involved the task must have been in an 
organization where the very form of the 
structure as well as the rules of the game 
seemed to be in an almost continual flux 
and the officers in charge were subjected 
to rotating tours of duty. In spite of 
this serious handicap, the procurement 
staff at Wright Field did manage to 
hammer out a number of highly effec- 
tive operating procedures, most notably 
those that made possible an objective 
evaluation of aircraft and aircraft de- 
signs submitted by rival manufacturing 
concerns. 

In perfecting administrative tools to 
assist in the selection of superior equip- 
ment, Air Corps officers had a number 
of historic precedents on which to draw. 
As far back as 1907, when the Signal 
Corps called for bids on its first airplane, 



110 



BUYING AIRCRAFT 



there was a substantial problem of eval- 
uation. 70 Air officers acquired a great 
deal of experience over the next thirty 
years, and by the end of the 1930's they 
could boast o£ a system that went far 
toward fulfilling the ideal of objective 
evaluation. 

The first step in the formal process of 
evaluation was the appointment of two 
or three separate boards of officers. The 
first, composed of pilots, put each air- 
plane entered in competition through 
a series of tests to determine its maxi- 
mum performance: speed, rate of climb, 
service ceiling, endurance, and so forth. 
The second board was composed of en- 
gineering officers who studied each air- 
craft in competition from the standpoint 
of engineering and design. They re- 
ported on the features that favored ease 
of maintenance or simplified engine 
change, on the relative ease with which 
each airplane in competition might be 
put into mass production, and so on. 
The third board, made up of officers 
from tactical units, evaluated the en- 
trants in terms of their suitability for 
the specific tactical function expected of 
them. A transport, for example, would 
be expected to excel in load-carrying 
capacity, whereas a fighter might be 
judged more heavily on high speed and 
maneuverability. Sometimes both per- 
formance and engineering features were 
evaluated by the same board, but the 



79 The Army's first airplane specification issued 
23 December 1907, is found in Charles deForest 
Chandler and Frank P. Lahm, How Our Army Grew 
Wings (New York: The Ronald Press, [1943]), pages 
145-61 and Appendix 6. For an interesting compari- 
son with British techniques of evaluation, see Army 
Military Airplane Competition, 191a, Report of 
Judges Committee. (A command report available in 
the Library of Congress.) 



characteristics evaluated remained as de- 
scribed above. 

In a contest amongst a number of air- 
planes, absolute objectivity in the selec- 
tion of the best is no doubt unobtain- 
able. The use of three separate boards, 
each with different personnel, made pos- 
sible, however, the virtual elimination 
of errors stemming from an improper 
relationship between an officer and a 
manufacturer. Not only did the num- 
ber of members on each board dilute 
the importance of any individual mem- 
ber's contribution, the very existence of 
three separate boards, each representing 
a different point of view, served to sub- 
ordinate further the ultimate importance 
of any single member. Moreover, the 
boards were not generally appointed un- 
til a short time before the actual evalua- 
tion, thus reducing the period during 
which any very purposeful influencing 
might be attempted by the manufac- 
turers. 

Once satisfied that the system of mul- 
tiple boards provided sufficient safe- 
guards against collusion, procurement 
officials took further steps to perfect the 
operation of the boards themselves. 
With the best of intentions, sincere but 
inexperienced officers might unwittingly 
blunder in their evaluation and selec- 
tion unless guided by a standing oper- 
ating procedure especially contrived to 
ensure the highest possible degree of 
objectivity. Such a procedure actually 
had been fashioned by the middle thir- 
ties. To begin with, each board was re- 
quired to submit a formal memorandum 
report on its findings. These staff pa- 
pers, following a prescribed format, were 
in themselves a strong incentive to ob- 
jectivity since they required that all con- 



PROCUREMENT LEGISLATION, ORGANIZATION, ADMINISTRATION 1 1 1 



elusions be deduced from facts presented 
as evidence in the body of the report. 
In addition, each board had to use a 
prescribed formula by which each item 
in competition could be graded by a 
system of points ranging down from a 
maximum of i,ooo. For all those char- 
acteristics subject to exact measurement, 
the formula provided a precise conver- 
sion into points. For features not sus- 
ceptible to exact measurement, the board 
had to assign points arbitrarily. This 
was not entirely objective, but, since 
each assignment so made had to be fully 
justified in the final report in relation 
to the other competitors, the opportu- 
nity for gross injustices in the award of 
points was substantially minimized. 71 

In practice, understandably enough, 
the evaluation of aircraft in competition 
often fell somewhat short of the ideal 
pattern prescribed. Records of the Ma- 
teriel Division reveal that many of the 
boards appointed to appraise aircraft ful- 
filled the provisions of their directive 
imperfectly and incompletely. Many of 
their omissions were undoubtedly attrib- 
utable to inexperience. Some were the 
fault of the system itself. For example, 
the board conducting the engineering 
phase of the evaluation procedure was 
required to assess the aircraft at hand in 
terms of its adaptability to quantity pro- 
duction. With one eye cocked on the 
ever-present possibility of war, this pro- 
vision made sense. But what did the 
board regard as mass production? Was 
it a dozen units or 50 or 500? More- 



71 For an account of evaluation procedures, see 
Mat Div Bull No. 31, ag Aug 36, AF Doc Reference 
and Research Br doc file, Doc 13/US/13. 



over, the board evaluated the aircraft 
itself, not the manufacturer. Was he 
equipped with tools and talent, with 
capital and all the other essentials of 
mass production? These the boards ig- 
nored in making their evaluation even 
though the Air Corps Act explicitly au- 
thorized the Secretary of War to reject 
any bid if it served the public interest 
to do so, and an award to a manufac- 
turer unable to produce his winning air- 
craft in quantity clearly fell within this 
discretion. 

The operation of evaluation boards 
in the prewar years was indeed imper- 
fect; nevertheless, to minimize the im- 
portance of the system for objective 
evaluation would be a grave error. The 
real significance in the formulation of a 
technique for the impartial determina- 
tion of winners in a competition did 
not lie in the promotion of honesty and 
the defeat of favoritism, though these 
achievements were certainly significant 
in themselves. Rather, the greater ac- 
complishment lay in the circumstance 
that the operation of boards tended to 
free the selection of aircraft from the 
caprice of command. Subjective selec- 
tion is no more valid when ordered by 
men with the full powers of high com- 
mand than it is when ordered by ill- 
trained underlings. The procedure for 
objective evaluation evolved within the 
air arm made it difficult for responsible 
officers in the highest echelons to act 
otherwise than objectively. To be sure, 
they could overrule a board's decision, 
but to do so without ample reasons in 
support was to invite criticism and even 
congressional investigation— an outcome 
many officers regarded as the ultimate 
in disaster. 



112 



BUYING AIRCRAFT 



To appreciate fully the significance of 
a system that went far toward freeing 
the air arm from decisions made on the 
whim of individual commanders, one 
has only to turn to the record of those 
who have operated without such a sys- 
tem. In this connection the records of 
McGook Field, the old engineering cen- 
ter of the Air Service before 1926, are 
both amusing and meaningful. 72 Selec- 
tion of airplanes seems to have been col- 
ored if not dominated by what might be 
called the joy stick approach of General 
Mitchell. Still flying in the romantic 
tradition of World War I or, as old- 
timers would proudly say, by the seat of 
his pants, the ever-enthusiastic General 
Mitchell would leap out of an experi- 
mental aircraft, pronounce it a "hot 
ship" and urge its immediate procure- 
ment. 

Perhaps an even more telling example 
of the catastrophe that might follow 
when the selection of weapons depends 
upon the will of individuals in high 
command is the notorious example of 

72 The old McCook Field records of the engineer- 
ing center are now filed in a body along with the 
retired section of the Wright Field Central Files 
cited herein as WFCF. 



the Nazi state during World War II. 
When Hitler relied upon bare intui- 
tion, in reaching vitally important engi- 
neering decisions, as he did, for example, 
in the production of jet fighter planes, 
disaster followed. Interference of this 
sort became, as General Henry H. Arnold 
later declared, a secret weapon highly 
advantageous to the enemies of Ger- 
many. 13 

Without question, the procedures 
evolved by the air arm to ensure an im- 
partial selection of aircraft played a most 
important part in assuring the all-around 
superiority of the weapons chosen. 74 
But these and the many other tech- 
niques worked out by Air Corps officers 
were not achieved without heartbreaks 
and trial and error extending over many 
years. 



"Henry H. Arnold, Global Mission (New York: 
Harper & Brothers, 1949), pp. 496, 516. See also, 
F. D. Graham and J. J. Scanlon, Economic Prepara- 
tion and Conduct of War under the Nazi Regime, 
Div WDSS, 10 Apr 46, as well as Military Intelli- 
gence Division (MID) reports of 8 and 14 Jun 45 by 
Captured Personnel and Materiel Branch, OCMH. 

74 For a rather full account of the steps in nego- 
tiating a contract, see testimony of General Pratt, 
House Hearings on War Department appropriation 
for 1935, February 4, 1934, pages 482-89. 



CHAPTER V 

Procurement Under the Air Corps Act 



Procurement: 1926—34 

The Air Corps Act of 1926 contem- 
plated three normal methods of procure- 
ment. First, there was the design com- 
petition leading to the purchase of one 
or more aircraft constructed according 
to the winning design as prescribed in 
Sections 10a to log of the act. Second, 
there was the provision for experimental 
contracts in Section 10k, which permit- 
ted the Secretary o£ War to buy any 
experimental aircraft at his discretion 
without competition. Finally, Section 
lot required competition where aircraft 
were to be procured on grounds other 
than those mentioned above, but al- 
lowed the Secretary to exercise discretion 
in determining "the lowest responsible 
bidder." Still another section, ioq, au- 
thorized procurement without competi- 
tion, but the stipulations of this section 
were assumed to be of a temporary char- 
acter applying only to aircraft already 
reduced to practice from designs pre- 
sented before the Air Corps Act was 
passed in 1926. 

The normal procedure for procure- 
ment contemplated by Representative 
McSwain and others who helped formu- 
late Section 10 of the Air Corps Act 
called for the use of the design competi- 
tion. When the Army needed aircraft 
it would send out circular proposals ask- 



ing for the submission of designs. When 
the designs had been evaluated and a 
winner selected, a contract could be 
awarded for the production of a single 
unit to test its adequacy in practice. If 
subsequent service tests of a small num- 
ber of units proved the aircraft satisfac- 
tory in the field, a large production order 
might follow. Occasionally, a manufac- 
turer might present an idea that air 
arm officials considered to be of suffi- 
cient interest to justify immediate pro- 
curement, without holding a design 
competition. For such situations, Sec- 
tion 10k, authorizing purchases to be 
made at a negotiated price without com- 
petition, provided a legal basis for action. 
Whenever air arm officers found that 
neither the design competition nor the 
experimental contract clauses suited the 
problem at hand, they could resort to 
Section lot. . 

Unfortunately for the air arm, pro- 
curement operations conducted "by the 
numbers," following the apparent intent 
of the law as expressed by its framers, 
did not attain the results desired. In 
practice the idea of design competition 
proved unworkable, for it yielded noth- 
ing more tangible than a paper promise 
to perform. When circular proposals 
went out inviting bids on a certain type 
of aircraft, a whole flood of replies re- 
turned to Wright Field. Inexperienced 



114 



BUYING AIRCRAFT 



designers were more than willing to 
dream up aircraft alleged to possess the 
most superlative flying qualities and per- 
formance capabilities— as yet unattained. 
Until a physical sample or experimental 
airplane could be built around the win- 
ning design there was no telling whether 
the evaluating board had picked a leader 
or a lemon. If they chanced to choose 
a lemon, a great deal of money and time 
had to be spent before the error could 
be confirmed. 1 

There were other flaws in the concept 
of a design competition. The time al- 
lowed for replies to a circular proposal, 
a few months at best, prevented manu- 
facturers from working up realistic plans 
to accompany their bids. The winning 
design generally had to be worked out 
in detail after the original bids had been 
returned. Actual costs usually out- 
stripped the estimates initially submitted, 
since the bidders had little or no de- 
tailed data on which to base exact price 
figures. As a consequence, manufactur- 
ers usually lost money on airplanes 
evolved from design competitions. 

Since the design competition was un- 
workable, there was only one thing to 
dor abandon the use of Section 10a to 
log in favor of the authorizations con- 
tained in 10k or lot, even though this 
had not been the intent of those who 
framed the Air Corps Act. Procurement 
officers began to purchase experimental 
airplanes under the authority of Section 
10k, which is to say, the Air Corps 
simply contracted for a finished experi- 



mental airplane at a negotiated price. 2 
But here lay a new source of trouble. 

While the negotiated contract resulted 
in the purchase of a successful airplane 
more often than did the design competi- 
tion, manufacturers still lost money. In 
their zeal to get the air arm to contract 
for an experimental item they deliber- 
ately bid below cost in the hopes of put- 
ting such a desirable product in the 
hands of Air Corps officers that a quan- 
tity order would soon be forthcoming. 
But unlike the provisions of the law 
that authorized the award of contracts 
for airplanes in quantity to the winner 
of a design competition without further 
advertisement, Section 10k only author- 
ized the purchase of experimental air- 
planes. The section made no mention 
of quantity procurement. Whenever the 
Air Corps wished to procure airplanes 
in quantity, the language of Section lot 
clearly called for competition by means 
of a new circular proposal and a new 
evaluation. In following this procedure 
there would be a strong possibility that 
a manufacturer other than the designer 
would submit the low bid and win the 
contract. 

The use of Section 10k to authorize 
procurement of experimental airplanes 
followed by the use of Section lot to au- 
thorize procurement in quantity would 
thus threaten to return the whole ques- 
tion of air materiel procurement to the 
chaotic and undesirable situation of the 
period before 1926. If designers were 
to lose money on experimental aircraft 
and then be denied an assured oppor- 



1 Maj Leslie MacDill to Chief, Mat Div, 13 Dec 29, 
WFCF 008 Proc. 



2 ESMR 50-13, 17 Feb 32, Present Air Corps Policy 
Concerning Procurement of Experimental Articles, 
WFCF 008 Proc. 



PROCUREMENT UNDER THE AIR CORPS ACT 



115 



tunity of recouping their losses with a 
production order because of the possi- 
bility that a rival firm might underbid 
them, would they be any better off after 
the passage of the Air Corps Act than 
they had been before? Manufacturers 
foresaw the threat and protested. 3 

Judge Advocate General officers in 
both the Army and Navy agreed that 
10k did not sanction the award of con- 
tracts for airplanes in quantity without 
competition. 4 On the other hand, they 
were inclined to believe that the prohi- 
bition on the use of 10k to authorize 
quantity procurement need not result in 
such disasters as the manufacturers pre- 
dicted. After all, they contended, Sec- 
tion tot granted discretion to the Secre- 
taries of War and Navy. One advisor 
felt that the very intent of lot was to 
dwarf price as a factor in making the 
award. s Another was equally explicit in 
pointing out that the Secretaries were 
empowered to consider such factors as 
quality and the need for an adequate in- 
dustrial preparedness in addition to low 
bids. 6 By taking advantage of factors 
other than price, the military lawyers 
felt, awards under tot could be made to 
the designer even when his bid was not 
the lowest submitted. No doubt this 
was sound law, but it turned out to be 



3 See, for example, C. M. Keys to Representative 
Carl Vinson, 31 Jan 27, cited in Pickens Neagle to 
Vinson, 5 Feb 27, photostat copy in JAG (Army) Gen 
Reds Sec, 400.1s, 11 Nov 35. 

* See Memo, Col J. I. McMullen, JAGD, 8 Nov 26, 
and Memo, Lt M. E. Gross for Maj Gen J. A. Hull, 
JAG, 10 Nov a6, both in JAG (Army) Gen Reds Sec 
400.12 Proc, 17 Nov 26; JAG (Navy) to SN, 12 Feb 27, 
JAG (Army) Gen Reds Sec 400.12 Proc file, 11 Nov 35. 

5 Neagle to Vinson, 5 Feb 27, cited n. 3. 

» Memo, JAG for ASW, 20 Oct 30, JAG (Army) Gen 
Reds Sec 400,12 Proc. 



faulty practice; as one manufacturer put 
the matter, a Secretary would have to 
display "an extraordinary amount of 
courage" if he were to exercise his dis- 
cretion and award a contract to other 
than the low bidder. 7 

Manufacturers were not the only ones 
to protest the possible use of the narrow 
interpretation of tot, which emphasized 
price. 8 Administrative officers within 
the departments also deplored the tend- 
ency. One naval officer bluntly charged 
that the Secretaries studiously avoided 
the use of tot for quantity procurement 
of aircraft because the "political conse- 
quences" made the exercise of discretion 
required by lot "intensely distasteful on 
personal grounds." 6 

In short, regardless of what the law 
said, administrators did not award quan- 
tity contracts on grounds other than low 
bid because they feared political criti- 
cism. With good reason, manufacturers 
protested that they were heading back 
toward evil days such as those before 
1926. Fearing that they might not win 
production contracts to amortize their 
losses from experimental work, prudent 
firms began to doubt the wisdom of ac- 
cepting any military contracts for ex- 
perimental projects. 10 Without willing 



7 Keys to Vinson, 31 Jan 27, cited n. 3. 

s Memo, JAG (Maj Gen E. A. Kreger) for Lt Col 
J. I. McMullen, 15 Sep 30, JAG (Army) Gen Reds Sec 
400.12 Proc. 

6 Memo, Comdr S. M. Kraus, 1 May 31, cited in 
W. O. Shanahan, Procurement of Naval Aircraft: 
1907-1937, Naval Aviation History Unit, vol. XVII, 
p. 355. 

10 Chief, Mat Div, to Cof AC, 3 Sep 30, WF Proc 032 
Gen Legislation. For evidence on losses sustained 
by manufacturers doing experimental work, see Presi- 
dent, ACC, to McSwain, 22 Nov 33, app. C in Rec- 
ommendations on National Aviation Policy prepared 
for Howell Comm by ACC, 12 Sep 34, AIA file 19. 



116 



BUYING AIRCRAFT 



manufacturers, progress in the quest for 
superior aerial weapons would be 
doomed. From this fate there appeared 
to be no escape unless some loophole 
could be found to circumvent the diffi- 
culty. 

Since the procurement provisions of 
the Air Corps Act seemed to offer no 
practicable means of securing aircraft in 
quantity without resorting to competi- 
tion after an initial experimental order 
under Section 10k had produced a su- 
perior model, there was an obvious solu- 
tion: amend the law. The chief of the 
Procurement Section at Wright Field 
urged that "all possible pressure" be 
brought to secure an amendment from 
Congress. The desired result could be 
obtained very simply by inserting the 
phrase "with or without competition" 
in the language of Section 10k where it 
alluded to quantity procurement. 11 A 
pair of bills to this effect were drafted, 12 
but the chief of the Air Corps refused to 
support them, confessing quite candidly 
his fear that any extended discussion of 
the Air Corps Act in Congress might 
lead to new legislation restricting the 
exercise of discretion by the Secretaries 
even further than was already the case 
under the statute as it stood. 13 The offi- 



11 Chief, Procurement Sec to Exec, Mat Div, 11 
Sep 30, and to Chief, Mat Div, 8 Dec 30, WF Proc 
032 Gen Legislation. 

12 H.R. 11569 and S. 4531, 72c! Cong, 1st sess, April 
1932. Both bills died in committee. H.R. 9359, 
70th Cong, 1st sess, was an earlier effort to amend 
10k, apparently sponsored by the Navy. This bill 
also died in committee. For a brief note on the 
content of these hills, see Notes on the Chronology 
of Section 10 . . . (Air Corps Act). AF Documentary 
Reference and Research Br, Doc 13/US/9. 

13 2d Ind, OCAC to TAG, 9 May 32, basic, McSwain 
to SW 29 Apr 32, WF Proc 032 Gen Legislation. 
For an example of air arm fears that new legislation 



cial Air Corps policy was thus to leave 
well enough alone— to preserve the ex- 
isting advantages of the Air Corps Act 
rather than risk losing all in an attempt 
to rectify its obvious deficiencies. 

An Artful Evasion 

The reluctance of the War Depart- 
ment to sponsor amendment of the Air 
Corps Act meant that some other means 
had to be found. Actually, there was an 
out, hitherto unrecognized as such within 
the provisions of the act, one subse- 
quently labeled an "artful evasion" by 
critics of the policy. If the Air Corps 
Act of 1926 failed to contain adequate 
authority, then procurement officers 
could turn elsewhere, in particular to 
the voluminous Army Regulations gov- 
erning procurement. 14 

Among other provisions, Army Regu- 
lation 5-240 prescribed that competition 
might be avoided in certain special cir- 
cumstances in which competition was 
impractical— for example, when the item 
sought was patented or when the manu- 
facturer of the article was the sole source 
and no similar or suitable item could 
be procured elsewhere. By construing 
Army Regulation 5-240 to define the 



would "open the door" detrimentally, see 1st Ind, 
Exec OCAC to Chief, Mat Div, 1 1 Jan 30, basic Chief, 
Mat Div, to CofAC, 3 Jan 30, WFCF 032 Legislation 
1939. Interestingly enough, about the same time 
Rear Adm. W. A. Moffett, Chief of the Bureau of 
Aeronautics, was urging the Secretary of Navy to 
"leave well enough alone" in the Air Corps Act of 
1926. Shanahan, Procurement of Naval Aircraft: 
1907-1939, p. 359. 

14 10th Ind, OASW to CofAC, 24 Aug 27, basic un- 
known, quoted in "Notes on the Chronology of Sec- 
tion 10 . . ." (Air Corps Act). See also, 6th Ind, 
OASW to TAG, 29 Jul 27, JAG (Army) Gen Reds 
Sec 452 Aircraft, 12 Jul 27 file. 



PROCUREMENT UNDER THE AIR CORPS ACT 



117 



manufacturer of an experimental aircraft 
purchased under Section iok with a 
negotiated contract as a sole source, pro- 
curement officers found a means of au- 
thorizing the award of production con- 
tracts without resorting to competition. 

The history of a single well-known 
aircraft design in the early thirties illus- 
trates this policy. 15 Glenn L. Martin 
designed and built the Martin XB-io, 
a twin-engine bomber, for the Air Corps. 
The Martin experimental contract came 
under the authorization of Section iok 
of the Air Corps Act. The price was 
negotiated. Since the first or experi- 
mental item showed promise, air arm 
officials purchased 10 more items, desig- 
nated YB-io, to conduct service tests. 
These, too, were procured at a nego- 
tiated price under the authorization of 
Section iok, since the quantity was limi- 
ted and the item was still experimental 
in many respects. Each successive item 
coming off the assembly line in this serv- 
ice test order was modified in one way 
or another as Martin engineers and de- 
signers corrected minor deficiencies and 
introduced novel features improving on 
the original design. By the end of the 
service test phase, the B-io represented 
an advanced design reflecting the ac- 
cumulated experience of the manufac- 
turer with that particular type of aircraft. 

Clearly, Martin had become a sole 
source. No other manufacturer could 
take the original design purchased under 
Section iok and reproduce the same air- 
plane exactly. Much of the art wrapped 
up in the B-io lay in the experience of 
Martin engineers and could not be com- 
mitted to drawings. Procurement offi- 



15 Aircraft Yearbook, 1934, pp. 125-26. 



cers might then readily certify that there 
was no counterpart in the commercial 
world and that no other suitable similar 
article was obtainable. Whereupon they 
would be free to authorize a production 
contract under the provisions of Army 
Regulations 5—240 referring to procure- 
ment without competition. 16 

In terms of dollars expended, the rec- 
ord of purchases made during the years 
from 1926 to 1934 clearly reflects the ex- 
tent to which the air arm procurement 
officers managed to conduct their opera- 
tions without resorting to the destructive 
competition so detrimental before 1926. 
After spending well over $16,000,000 in 
experimental contracts under 10k, pro- 
curement officers negotiated contracts in- 
volving more than $22,000,000 under the 
terms of Army Regulation 5-240, which 
permitted noncompetitive purchases 
from a sole source. But what of the 
alternative, Section lot, which imposed 
the necessity of competition? Between 
1926 and 1934 the air arm procured 
scarcely more than $750,000 worth of 
materiel under the terms of this clause. 17 

A year-by-year analysis of the types of 
legal authorization employed in air arm 
contracts after 1926 points up even more 
vividly the extent to which procurement 
officers used negotiated contracts rather 
than competitive contracts. During 1927 
virtually all contracts used the authoriza- 
tion contained in loq. Of the 389 air- 
craft on contract in 1928, all but one used 
the "sole source" authorization for nego- 
tiated contracts. Virtually the same pat- 



16 Memo, Chief, Proc Sec for Chief, Mat Liaison 
Sec, with Incls, 1 Jun 34, WFCF 334.8 Hearing, 1935. 

17 "Notes on the Chronology of Section 10 . . ." 
(Air Corps Act). 



118 



BUYING AIRCRAFT 




Martin B-10 



tern recurred from 1929 through 1931. 
Of 413 aircraft put on contract in 1932, 
not one was advertised competitively. 18 
Procurement officers obviously had per- 
fected means of circumventing the in- 
sufficiencies or the inadequacies of the 
Air Corps Act. But in finding legal 
justification to avoid competition in plac- 
ing contracts, the officers were in no way 
guilty of any clandestine evasion of the 
law. Each year the annual report issued 
by the Assistant Secretary of War received 
wide public distribution. Contained in 
every such report was a tabular listing 
of all contracts awarded for air materiel. 
Each contract showed the legal basis for 
the award. Moreover, every contract 
signed by procurement officers was duly 
reported to Congress. Less they could 
not do, for Section 10m of the Air Corps 
Act specifically required full and item- 
ized reports to Congress on every con- 
tract signed. From 1926 to 1934, year 
after year, the air arm made each con- 
tract for air materiel a matter of public 

18 Unsigned Memo on JAG letterhead, sub: Pro- 
curement Under the Air Corps Act, 11 Apr 34, JAG 
(Army) Gen Reds Sec 452.1 Aircraft. 



record in the annual report on procure- 
ment sent to Congress. 

An impartial observer could scarcely 
help but conclude that the forms of law 
had been duly observed. Nonetheless, 
in January 1934 the Washington Post 
published a report that grave charges of 
irregularities in air arm procurement 
were about to be laid before the House. 
The Post report was a signed feature 
article, but it gave no source for its accu- 
sations, which can be summarized in a 
single quotation from the whole text: 
"Over the protests of Comptroller Gen- 
eral McCarl with Congress ignorant of 
what was going on, the War Department 
for seven years has been procuring air- 
craft for the Army Air Corps in contra- 
vention of the intent of the sponsors of 
the act of 2 July 1926. . . ." 19 

The accusation of wrongdoing in the 
Air Corps implied that the law had been 
evaded and procurement officers had in- 
dulged in the "crime" of negotiated con- 
tracts. The charge that air arm officers 
had hoodwinked Congress was patently 



Washington Post, January 27, 1934. 



PROCUREMENT UNDER THE AIR CORPS ACT 



119 



false; each of the contracts negotiated 
was legal, but, accurate or not, the damn- 
ing allegations were sufficiently serious 
to suggest the need for careful investiga- 
tion. When Congress did turn attention 
to the indictment of wrongdoing, charges 
and countercharges, investigations and 
recriminations rained down with the fury 
of a cloudburst. 

Congressional Cloudburst 

The wave of congressional criticism 
that seemed about to inundate the air 
arm began in January 1934 when the 
House Military Affairs Committee started 
routine hearings to weigh the respective 
merits of the various bills placed in the 
legislative hopper at the opening of the 
session. 20 It became evident to War De- 
partment observers that Congress was in 
an unusually aggressive mood. Hearings 
that had been scheduled to consider 
strengthening the Air Corps along the 
lines proposed by the Drum Board soon 
began to expand into problems far be- 
yond the scope initially contemplated. 21 

The Merchants of Death 

To reconstruct the atmosphere in 
which Congress conducted the air arm 
hearings of 1934 one need not go far 
afield. Since the preceding fall Senator 
H. D. Black of Alabama had been con- 



ducting an investigation of the federal 
subsidies received by private airmail con- 
tractors. The senator pushed his attack 
with the zeal of an ambitious district at- 
torney, and soon the headlines were re- 
porting accusations of scandalous profit- 
eering by airline firms abusing govern- 
ment subsidies. 22 The public was left 
with the impression that most if not 
all of the big airlines were guilty of gross 
plundering. Since many of the leading 
aircraft manufacturers were linked by 
corporate ties to the airlines, the brush 
that tarred the airlines tarred the manu- 
facturers as well. Rightly or wrongly, the 
Black investigations brought the aircraft 
manufacturers into generally low repute. 

In similar fashion the so-called Pecora 
hearings impaired the prestige of the air- 
craft industry. Justice Ferdinand Pecora 
of New York, investigating stock ex- 
change practices for a Senate committee, 
struck a glancing blow at the industry 
by uncovering what many felt to be 
grave abuses practiced by financiers rig- 
ging the market in aviation stocks for 
the advantage of insiders. 23 The evi- 
dence uncovered was sparse and con- 
cerned only a few people, but the dis- 
closures appeared at a crucial moment, 
for this was precisely the time when the 
press and the public were in hot pursuit 
of war profiteers. Only a few months 
earlier a War Policies Commission, at 
the request of Congress, had studied the 



20 For example, H.R. 7413, H.R. 7601, and H.R. 
7657, all introduced by Representative McSwain. See 
also New York Times, January 7, 1934, p. 10, and 
February si, 1934, p. 10. 

21 SW to McSwain, a 1 Feb 34, mimeo copy in Na- 
tional Archives, Red Group 94, AGO central files, 
box 249, file 031-032. 



- 2 Hearings before Special Com on Investigation of 
Air Mail and Ocean Mail Contracts, Senate, 73d 
Cong, 2d sess, pts. 1-9. 

23 Banking and Currency Com, Senate, 72d Cong, 
Hearings on Stock Exchange Practices, See espe- 
cially, pts. 6 and 16, passim, March 1933 and March 
1934- 



120 



BUYING AIRCRAFT 



record of profit making in World War I. 24 
While the Pecora hearings were still 
under way a sensational book entitled 
Merchants of Death came off the press. 25 
It was but the best known of many works 
charging the munitions makers with evil 
intent. The munitions makers, accord- 
ing to the critics, would supply every- 
thing for a war "from cannons to a casus 
belli" in their selfish pursuit of profits. 26 

Against the background of fear, mis- 
trust, accusation of wrongdoing, outright 
peculation and plundering of the public 
treasury, alleged or proven, Congress 
considered budgets for the military serv- 
ices. A more inopportune time could 
scarcely have been found. 

From the military view, the first real 
misfortune arising from the suspicious 
mood of Congress fell upon the Navy. 
Testimony presented at the hearings on 
the Navy's appropriation bill in Janu- 
ary 1934 brought out evidence to show 
that at least one manufacturer holding a 
Navy contract for air materiel during 
the boom years had reaped profits in ex- 
cess of 43 percent on the sum of the 
contract. 27 The reaction was immediate. 
Already aroused to the menace of profit- 
eering, House members were quick to 
take up the scent, and soon a committee 
was busily investigating the Navy's pro- 
curement procedures. Subsequent find- 
ings by the committee revealed that the 



24 See app. I in report o£ SW for fiscal year 1932, 
and Proceedings of War Policies Comm, H Doc 163 
and Misc H Doc 271, 7zd Cong, 1st sess. 

25 H. C. Engelbrecht and F. C. Hanighen, Mer- 
chants of Death (New York: Dodd, Mead and Co., 
»934>- 

26 The quip is from "Arms and the Men," For- 
tune, March 1934. 

27 House Hearings on Navy Dept appropriation 
for 1935, January 2, 1934, pp. 421-22. 



enormous earnings were confined to an 
isolated instance where one engine 
manufacturer had indeed made excessive 
profits but only for a short period. 28 It 
took time to bring out such clarifications, 
and meanwhile the damaging charges of 
profiteering continued to rankle in the 
minds of congressmen as headlines played 
the allegations for all they were worth. 

When the Chief of the Air Corps fol- 
lowed his Navy opposite number to the 
Hill to present his budget for the en- 
suing year, he found the congressmen 
armed with questions suggested by the 
recent disclosures and allegations. Maj. 
Gen. Benjamin D. Foulois, the incum- 
bent chief of the air arm was a vigorous 
advocate of air power. He enjoyed a 
record of many years of honorable serv- 
ice, but he was not noted for his tact. 29 
When the committee fired questions at 
him, he responded to them bluntly and 
without guile. In reply to a query he 
asserted, "We generally negotiate con- 
tracts." This was literally true, but the 
truth might have been explained in its 
proper context if the general had wished 
to continue the practice. He apparently 
did not realize the extent to which the 
"negotiated contract" had become anath- 
ema on the Hill in recent months. This 



28 Naval Affairs Com, House, Hearings, item 6, 
Information as to the Method of Awarding Contracts 
for Ships and Aircraft for the US. Navy, January 24- 
February 2, 1934, in Sundry Naval Legislation rpjj- 
34- 

29 For an example of the vigorous expression of the 
Chief of the Air Corps, see Washington Post, April 

'933' report of his testimony before the House 
Military Affairs Committee, and the reaction to this 
report in Memo, Chief, Budget and Legislative Plan- 
ning Branch, for General Drum, 1 Apr 33, in Na- 
tional Archives, Record Group 94, AGO central files, 
box 211, file 011. 



PROCUREMENT UNDER THE AIR CORPS ACT 



121 




in itself might not have stirred up much 
trouble, but the general took the bait a 
second time. In response to a leading 
question he asserted that it was air arm 
policy to procure from already estab- 
lished concerns. 30 The congressmen were 
left to infer from this that the Air Corps 
favored big business rather than small 
business and dealt by preference with 
the insiders. Such a remark dropped in 
the context of recurrent charges of fraud- 
ulent stock market deals and illicit pro- 
curement practices was scarcely calculated 
to calm congressional fears. 

Still later, when discussion revealed 
that procurement officers allowed a 15- 
percent profit margin in negotiated con- 
tracts, the fat was fairly in the fire. 31 
For critics of air arm policies, here was 
"evidence" to justify investigation. 

If congressmen began to feel that 
surely something must be wrong with 
the system of procurement or the men 
who ran it, their attitudes were perhaps 
understandable within the context of 
the times. General Foulois testified on 
14 and 15 February 1934. Only three 
or four days earlier the President had, as 
a consequence of the disclosures of the 
Black Committee, canceled the airmail 
contracts held by the privately owned 
airlines. Until some permanent solu- 
tion appeared, he ordered the Air Corps 
to carry the mails. Scarcely a week later 
one of the Army pilots assigned to the 
mails died in a crash. Shortly thereafter 
there was another crash, and then an- 
other. Each successive death seemed to 
reinforce the suspicions of the congress- 



30 House Hearings on WD appropriation for 1935, 
February 14, 1934, pp. 478-79. 
ai Ibid., p. 551, February 15, 1934. 



General Foulois 

men and to confirm the allegations of 
the scandalmongers by linking the profit- 
eering of the airlines to the inferior air- 
planes operated by the Army. For this 
reason alone, the Air Corps could ex- 
pect a thoroughgoing investigation, but 
worse was yet to come. 

The Delaney Committee 

When the cry of profiteering on Navy 
contracts first appeared, Representative 
Carl Vinson, the experienced chairman 
of the House Naval Affairs Committee, 
launched an immediate investigation 
with a subcommittee headed by Repre- 
sentative J. J. Delaney of New York. 
After two months of listening to a 



122 



BUYING AIRCRAFT 



parade of witnesses and accumulating 
some 800 pages of recorded testimony, 
the committee published a final report. 32 
Its findings were in sharp contrast to the 
charges of profiteering and corruption 
that had led to the investigation in the 
first place. The profits made by con- 
tractors doing business with the Navy 
on air materiel, the committee found, 
were "moderate and reasonable." Air- 
craft manufacturers had garnered an 
average of only 11.5 percent on their 
costs before state and federal income 
taxes. Navy procurement policies were 
not only free from taint of collusion, 
the committee reported, but were also 
"prudent and practicable," inducing 
keen competition even in a limited field. 
In fine, the investigators learned, as had 
the Lampert and Morrow groups before 
them, aircraft "cannot be handled in ex- 
actly the same way as . . . commodities 
in an open market." Sometimes nego- 
tiated contracts were essential. 33 

Had the public at large and the mem- 
bers of Congress all read the report of 
the Delaney Committee with its temper- 
ate findings, the furor over the procure- 
ment of air materiel might have abated 
rapidly. This was not to be the case. 
The headlines charging the Navy with 
laxity and accusing manufacturers of 
profiteering made more lurid reading 
than did a sober recital of facts in statis- 
tical array. The charges made exciting 
copy for nearly a month; the denials 



32 Delaney Hearings and Delaney Report, items 18 
and 37, respectively, in Sundry Legislation Affecting 
the Naval Establishment 1933-34, cited |n. 56, ch. lE| 
above, 

33 Delaney Rpt, pp. 1470-71. Delaney Hearings, 
pages 1113-36, contains discussion of the committee 
in framing the report. 



issued by the committee exonerating the 
Navy and the manufacturers made copy 
for but a single day. While the New 
York Times made a front page story of 
Congressman Vinson's decision to in- 
vestigate huge profits in Navy contracts, 
the report of the committee over two 
months later was buried far back on the 
fifteenth page. 34 

The unfavorable cast of public opin- 
ion was still further distorted when a 
single member of the Delaney Commit- 
tee accused the majority of whitewash- 
ing the Navy and filed a minority report 
contradicting the findings of the group. 
The author of the minority report spread 
his case in the Congressional Record, 
while the report of the majority re- 
mained virtually buried in a hard-to-find 
publication of miscellaneous hearings. 
As so often before, the newspapers picked 
up the sensational minority report and 
gave it a play. The New York Times 
quoted the author in declaring that "new 
evidence" of illegal procurement had 
been turned up, but refrained from ana- 
lyzing the "new evidence." 35 Had they 
wished to do so, the members of the com- 
mittee majority might easily have demon- 
strated that the minority report was mis- 
leading because it rested upon dubious 
premises and made flatly contradictory 
recommendations. 36 Nonetheless, they 
remained silent. The sensational minor- 
ity report stood uncontroverted, and the 
public at large was left to believe what 
it wished. As a consequence, the issues 
at hand became thoroughly confused. 



34 New York Times, January 30 and March 9, 1934. 

35 Ibid., March 19, 1934. 

30 Delaney Rpt. See also, Cong Red, May 30, 1934, 
pp. 10034ft. 



PROCUREMENT UNDER THE AIR CORPS ACT 



123 



A Confusion of Issues 

As soon as the Delaney Committee be- 
gan to probe Navy procurement prac- 
tices, there were demands for a similar 
investigation of the Army. One con- 
gressman demanded to know if the Air 
Corps allowed its contractors to reap im- 
mense profits such as those mentioned 
in the Navy investigation. 37 Another 
complained that unbeknownst to Con- 
gress, air arm procurement officers were 
violating the Air Corps Act of 1926. 
"We had not the slightest idea that prac- 
tically every bid is let without real com- 
petition." 38 Yet another asserted posi- 
tively (and quite erroneously) that the 
United States ranked eighth among the 
nations of the world in the number of 
aircraft engine factories. This "very 
backward position" he attributed to the 
"bankers' control of the American avia- 
tion industry." All this, the speaker felt, 
demonstrated the existence of a giant 
"air trust," a combination that set the 
high prices government procurement of- 
ficers were obliged to pay. 39 

Some of the charges aired in and out 
of Congress were too vague to be denied. 
Yet, taken all together, the various claims 
of wrongdoing added up to a formidable 
if somewhat confused accusation. There 
were, of course, a few voices raised in 
protest over the inaccurate and mislead- 
ing character of statements repeatedly, 
made, but these attempts at rebuttal were 
lost in the clamor. 40 As usual, the black- 



37 New York Times, February 8, 1934. 

38 Cong Red, March 2, 1934, p. 3617. 
38 Ibid., March 6, 1934. pp. 3863-67. 

40 See especially, remarks of Representative Collins 
of Mississippi, in Cong Red, March 8, 1934, p. 4018. 



est headlines went to those who shouted 
scandal and promised spectacular revela- 
tions—to be produced in full somewhat 
later. 

Although proposals for reform were 
numerous, everyone seemed to agree 
upon at least one point. A thoroughgo- 
ing investigation of air arm procurement 
methods should be held. Representative 
McSwain, in his strategic position as 
chairman of the Military Affairs Com- 
mittee, took advantage of this unanimity 
of feeling to secure passage of a resolu- 
tion directing his committee to under- 
take an investigation of the air arm. The 
committee, McSwain declared, would en- 
deavor to find how abuses in the pro- 
curement of air materiel came about and 
to frame legislation to prevent their re- 
currence. 41 The actual work of con- 
ducting hearings and gathering evi- 
dence fell to an eight-man subcommittee 
headed by Representative W. N. Rogers 
of New Hampshire, from whom the 
group took its popular name. 

The Rogers Committee 

The committee began its investigation 
of the air arm in a mood far less hostile 
than might have been expected from 
the prevailing temper of Congress. Rep- 
resentative McSwain promised that the 
investigation would undertake no junk- 
eting, nor would it "besmirch any repu- 
tation upon hearsay evidence." More 
significantly, while begging the House 
to drop all partisan charges, he urged 
the Congress not to prejudge the case. 42 
Amidst the numerous misrepresentations 



41 Cong Red, March 2, 1934, pp. 3613-14. 
« Ibid. 



124 



BUYING AIRCRAFT 



of the allegations of the day, this was 
welcome objectivity. Moreover, the 
members of the committee seemed gen- 
erally to favor the concept of air power, 
holding that the Air Corps would soon 
become the first line in the nation's de- 
fense if it had not already reached that 
stature. 43 And, finally, at least two of 
the committee members had served pre- 
viously with congressional groups inves- 
tigating the procurement problem in the 
air arm. 44 All the auguries indicated a 
fair investigation would be forthcoming. 

When the Rogers Committee opened 
its hearings, the Chief of the Air Corps 
requested that the testimony be heard 
in executive session. The committee 
obligingly complied. No doubt consid- 
erations of military security carried some 
weight with the members— or the chair- 
man may have recalled the unhappy 
experience of the Lampert Committee, 
which suffered from an unscrupulous use 
of its published hearings as a sounding 
board for disgruntled claimants against 
the government. Whatever the motives, 
the hearings were closed. This decision 
could not have been easy, since to close 
the hearings to the press meant to fore- 
go a great deal of publicity. 

In haste and under pressure conjured 
up by the temper of the times the Rogers 
Committee's findings and recommenda- 
tions wefe just what one might have ex- 
pected Under the circumstances: a de- 



43 See, fot - example, the committee's final report in 
House Rpt 2060, 73d Cong, ad sess, June 18, 1934, 
reprinted ifi Cong Red, 74th Cong, 1st sess, June 15, 
'935- P- 9394- 

** Representative Rogers served on the Lampert 
Committee in 1985, and Representative James was a 
member of the committee that considered Section 10 
of the Air Corps Act in 1986, 



mand for competition on all contracts 
for procurement in quantity and a re- 
turn to aggressive design competitions 
for experimental contracts as contem- 
plated in the original McSwain measure 
of ig26. 4B 

The revisions in procurement policies 
demanded by the Rogers Committee 
were one response to the outcry against 
profiteering, but they were by no means 
the only response. The several hearings 
in Congress— investigations by commit- 
tees and subcommittees in both the 
House and Senate— produced a number 
of plans for rejuvenating air arm pro- 
curement. Every congressman seemed 
to have his pet scheme for saving avia- 
tion. 

Congressional Panaceas 

Taken collectively, the numerous pro- 
posals suggested for reforming air mate- 
riel procurement fell into three or four 
broad groups. Some felt that greater 
economy and efficiency would result 
from a system of joint Army and Navy 
procurement, but proposals leading to 
such a scheme soon became involved in 
the highly controversial question of a 
department of defense that blurred the 
focus and tended to drop the procure- 
ment question from sight. 46 Some felt 
that a solution to the problem of air 
materiel procurement lay in turning the 

45 Cong Red, June 18, 1934, p. 12479, ar >d House 
Rpt 2060. 

46 This discussion of joint Army-Navy procure- 
ment may have induced the President to create by 
Executive order a co-ordinating agency, the Aviation 
Procurement Committee, under the Procurement 
Division of the Treasury. The venture was short 
lived. WFCF 334.8 Minutes of Aviation Proc Com, 
1935- 



PROCUREMENT UNDER THE AIR CORPS ACT 



125 



manufacture of all aircraft and aircraft 
accessories over to the government. 
Some merely favored curbs of excessive 
profits. Still others were sure that only 
a revision in the laws governing procure- 
ment would save the nation from abuses. 
Each group of proposals deserves con- 
sideration in some detail. 

Government manufacture of aircraft 
as a way out of the difficulties over pro- 
curement attracted a good deal of atten- 
tion. Considering the current talk about 
munitions makers as merchants of death 
and in view of the diminished prestige 
of private enterprise near the bottom of 
a depression, this faith in government- 
owned factories was scarcely surprising. 
Something of the bitterness toward "big 
business" that motivated advocates of 
government factories was expressed by 
the congressman who felt that the air- 
craft manufacturers had made "some- 
thing like a racket" of Air Corps con- 
tracts. Government manufacture, he be- 
lieved, "would have a good deal to do in 
preventing war." 47 Since the Navy al- 
ready had such a facility— an aircraft fac- 
tory at Philadelphia, which built planes 
during World War I— attention turned to 
the utilization of this plant. 

There were only a few congressmen 
who actually advocated production or 
even the manufacture of any large per- 
centage of military aircraft at the gov- 
ernment plant; nevertheless, there were 
many who seemed to feel that a vigorous 
use of the Naval Aircraft Factory would 
serve as an ideal weapon to drive down 
excessive prices charged by privately 
owned concerns. In addition, some also 



47 Testimony quoted in House Rpt 1506, 73d Cong, 
2d sess, May 7, 1934, p. 15. 



saw in the government plant a useful 
measuring stick by which procurement 
officers could acquire firsthand informa- 
tion on the actual costs involved in air- 
craft fabrication. 48 The President him- 
self seems to have toyed with this idea 
at one time. 49 

For many reasons, however, costs de- 
termined in a government plant could 
not readily be employed to measure pri- 
vate costs. For example, the use of civil 
service employees imposed a number of 
special conditions upon federal projects 
that did not apply in private industry. 
This consideration alone seriously ob- 
scured the cost figures of government 
plants. In addition, government account- 
ing and budgeting practices did not re- 
quire federal facilities to carry all the 
burdens of depreciation, capital costs, 
maintenance, and overhead costs that are 
inescapable in a private venture. One 
Navy spokesman expressed the matter 
bluntly: costs computed at the Naval 
Aircraft Factory would be "quite useless" 
as a check on private industry. 50 Never- 
theless, Congress went right ahead and, 
to the distress of many military officials, 
tacked a rider on an important naval au- 
thorization bill stipulating that at least 
10 percent of the aircraft procured should 
come from government-owned, govern- 
ment-operated plants. 51 

Those who favored profit curbs as a 
means of preventing abuse in military 
procurement found a ready audience. 

4S Delaney Hearings, pp. 952-53. 

49 Actg SW Woodring to President, ag Nov 35, SW 
and OASW files, AC Gen Questions. 

50 Note on table prepared by Navy Dept showing 
record of operations at Naval Aircraft Factory, 
printed in Minority Rpt by a member of the Delaney 
Subcom, Delaney Rpt, p. 1473. 

si 48 Stat 503; 34 USC 494, March 27, 1934. 



126 



BUYING AIRCRAFT 



Had not the papers been filled with re- 
ports of fantastic profits in the aircraft 
industry? Was not the government the 
major market for aircraft in the United 
States? Then surely it must follow that 
the government's laxity in negotiating 
contracts had served to line the pockets 
of the manufacturers. Such was the line 
of reasoning pursued by those who urged 
a limitation on profits. Obviously, these 
abuses must end, so, in addition to the 
10-percent rider pertaining to the Naval 
Aircraft Factory that encumbered the 
naval expansion bill of 1934, Congress 
put a limit of 10 percent on the profits 
of all manufacturers with contracts for 
naval materiel, including aircraft. 

Congress accepted the limit on profits 
in the belief that such a ceiling was nec- 
essary to prevent profiteering. But the 
voices shouting profiteer were more 
shrill than accurate. The facts revealed 
a very different story. Over the years 
from 1926 to 1933, the aircraft manu- 
facturers had not made the fantastic 
profits claimed for them. The major 
airframe manufacturers took a profit of 
0.2 percent (on cost) of their combined 
Army, Navy, and commercial sales. Even 
adding in the far more profitable busi- 
ness of the engine manufacturers, the 
average profit (on cost) came to but 10 
percent on the combined total business. 52 
Considering only Air Corps contracts for 
the years 1926 through 1933, the profits 
earned by airframe and engine manu- 
facturers were even less, ranging around 
9 percent on cost. Moreover, these firms 
suffered an average loss of 50 percent on 



52 From tables prepared by Bureau of Supplies and 
Accounts, Navy Dept. Delaney Hearings, p. 503. 



cost in experimental contracts. 53 Com- 
bining the experimental losses with the 
production gains produces an average 
profit of around 8 percent, hardly fan- 
tastic. Audits of Navy contracts revealed 
only slightly higher profits, returning 
1 1 .5 percent on costs of combined ex- 
perimental and production orders. 54 
Such figures clearly showed that neither 
the Army nor the Navy had permitted 
any wholesale profiteering. Net earn- 
ings ranging between 7 and 11.5 percent 
of costs before taxes were by no stretch 
of the imagination excessive for such a 
high risk venture as aircraft manufac- 
turing. 55 

While the 1934 law limiting profits 
provided for the recapture of all earn- 
ings in excess of 10 percent, there was 
no corresponding floor under losses. If 
the limit were to be applied in good 
years, preventing the accumulation of 
surpluses, how would the manufacturers 
carry their overhead charges in lean 
years? 56 Questions such as this the ad- 
vocates of profit ceilings left unanswered. 
As a consequence, there were repeatedly 
voiced proposals in Congress calling for 
a radical revamping of the existing stat- 
utes governing procurement. 57 

The demand for revision of the law 
was at least in part from responsible 
sources and could not be ignored. If 
the law were to be revised, it became 
relevant to ask, what had been the ob- 



5S Ibid., pp. 502-03. 
5i Ibid., pp. 1040-41. 

55 Testimony of C. E. Orton, Chief Auditor for 
AC, House Hearings on WD appropriation for 1935, 
February 15, 1934. P' 533- 

58 The case against rigid profit curbs is presented 
in Delaney Hearings, pp. 807, 815-16, 839-30, 1039, 
1088. 

57 Ibid., pp. 556, 584-85- 



PROCUREMENT UNDER THE AIR CORPS ACT 



127 



jective of the Air Corps Act? Those 
who had framed the act asserted a three- 
fold aim: they wished to procure aircraft 
of maximum performance at a minimum 
price while at the same time ensuring 
a healthy aircraft industry as a national 
resource of advantage in time of danger. 

Those who advocated a return to 
strict competition had a decided advan- 
tage—the idea of competition in the 
award of public contracts was a tradi- 
tion of long standing. "Competition" 
was a good word implying equality of 
treatment and opportunity for struggling 
small business in the best American tra- 
dition. The converse of competition 
was "monopoly" or "trust." As for "ne- 
gotiated contracts," it was easy to con- 
jure up pictures of insidious practices, 
secret meetings, and generally devious 
doings of a pernicious nature whenever 
negotiation took place. 

Actually, "competition" and "negotia- 
tion" tended to become rather careless 
generalizations and catch phrases. An 
undue emphasis upon competition could 
defeat the main objectives that the pro- 
ponents of the Air Corps Act sought to 
achieve. 38 Moreover, negotiated con- 
tracts were by no means entirely non- 
competitive. Engines might be pur- 
chased by a negotiated contract on a 
sole source basis, but they entered into 
competition indirectly. Aircraft design- 
ers specified the engine to be used in 
any given airframe, and where the air- 
craft was bought competitively, the en- 



58 The case for negotiating production contracts 
with the manufacturer of a successful aircraft devel- 
oped on an experimental contract appears in vir- 
tually every important hearing. For the arguments 
presented in 1934, &ee Delaney Hearings, pp. 473-75, 
6 93. 724-26, 750-51. 9i 1-12. 



gine shared in that competition. 59 Fur- 
thermore, even where the Air Corps 
awarded a contract for an aircraft in 
quantity at a negotiated price following 
an earlier experimental order there was 
competition, albeit indirect. Air arm 
procurement officers required manufac- 
turers to submit options for production 
quantities when accepting an experimen- 
tal order. Thus, even if the subsequent 
production order was not thrown open 
for bids there was competition, for the 
manufacturer recognized that the prices 
quoted in his production option could 
have a determining effect upon the pur- 
chase of his original experimental air- 
craft. 60 

After a hasty study touching briefly 
on most of the proposals discussed above, 
the Rogers Committee reported out rec- 
ommendations urging a drastic return 
to competition. In addition, the com- 
mittee found the Air Corps "inefficient" 
and "expensive," while using "various 
subterfuges" that added up to a "perni- 
cious, unlawful" system of procurement. 
On top of all this the committee charged 
the Chief of the Air Corps with gross 
misconduct, and held him guilty of "de- 
liberate, willful and intentional viola- 
tions of the law." 61 

Despite the intemperate language of 
the Rogers Committee report and in the 
face of the committee's vigorous recom- 
mendation for a return to competition 
in procurement, Congress adjourned 



59 Ibid., pp. 464-65; Memo, OASW for CofS, 17 
Aug 36, SW and OASW files. AC Gen Questions, 
item 363. 

60 Delaney Hearings, p. 849. 

61 House Rpt 2060, 73d Cong, 2d sess, June 18, 
1934, reprinted in Cong Red, p. 9384, June 15, 1935, 
74th Cong, 1st sess. 



128 



BUYING AIRCRAFT 



without amending the Air Corps Act 
of 1926. It may be that mere legisla- 
tive accident played some part in the 
decision not to amend the Air Corps Act 
in 1934. On the other hand, at least 
a partial explanation of why the con- 
gressmen were unwilling to amend the 
law may be found in the new procure- 
ment policy promulgated by the Assist- 
ant Secretary of War within the terms 
of the 1926 act. 

New Procurement Policy 

The new procurement policy con- 
trived by Assistant Secretary of War 
H. H. Woodring was, in essence, a re- 
turn to' competition. In his testimony 
before Congress as well as in his reports 
to the President and to the public, the 
Assistant Secretary went out of his way 
to publicize his decision to insist upon 
competition. He assured Congress re- 
peatedly that he personally favored com- 
petitive contracts with all their safe- 
guards of sealed bids and attendant 
publicity in preference to the prevailing 
procedure of negotiated contracts. In- 
deed, the Assistant Secretary fairly cut 
the ground from under all those con- 
gressmen who advocated radical changes 
in the Air Corps Act of 1926. In achiev- 
ing by administrative action what the 
congressmen hoped to accomplish by 
statutory mandate, Secretary Woodring 
spiked their guns and probably fore- 
stalled amendment of the Air Corps Act. 

The circumstances that induced Mr. 
Woodring to take a firm stand in favor 
of competitive procurement reflect one 
of the dilemmas of air materiel procure- 
ment. Interestingly enough, Mr. Wood- 
ring's decision to insist upon competi- 



tion in aircraft procurement antedated 
the agitation in Congress. 

To begin with, as a man of wide leg- 
islative experience the Assistant Secre- 
tary must have recognized the impor- 
tance of leaving a complicated piece of 
legislation undisturbed upon the statute 
books, After eight years, Section 10 of 
the Air Corps Act had become an inte- 
gral part of the air arm. Much of the 
administrative routine at Wright Field 
stemmed from its provisions. And these 
procedures or administrative routines 
represented a wealth of experience pain- 
fully accumulated through mistakes 
made in applying the Air Corps Act in 
practice. Perhaps of even greater im- 
portance were the many rulings of the 
Comptroller General, and the legal opin- 
ions of the Attorney General and the 
Army's Judge Advocate General inter- 
preting the Air Corps Act. Since neither 
the General Accounting Office nor the 
legal advisors would give rulings or opin- 
ions on hypothetical cases in advance, to 
draft a new law would mean that opin- 
ions and rulings would have to wait un- 
til specific cases came up for interpreta- 
tion. In short, since every new statute 
passed by Congress carries with it the 
threat of undoing years of work, Mr. 
Woodring had good reason to seek a so- 
lution to his problem by means other 
than amendment. 

To purchase aircraft in production 
quantities during fiscal 1933, Congress, 
it will be recalled, appropriated somewhat 
more than $10,000,000, 82 but the Presi- 
dent then impounded $7,000,000 of this 
sum as an emergency economy measure. 
Toward the end of the year the admin- 

62 See above [ch. Ill 



PROCUREMENT UNDER THE AIR CORPS ACT 



129 



istration's policy shifted, and the Public 
Works Administration (PWA) agreed to 
make available to the Air Corps $7,500,- 
000 in relief funds. This sum was 
slightly larger than that impounded by 
the President several months earlier, but 
because of rising costs during the inter- 
val it would now buy fewer aircraft. 63 

When the PWA money became avail- 
able late in 1933, the Air Corps found 
itself with a shortage of more than 700 
aircraft; the planes on hand were not 
even enough to equip the units already 
activated. 64 In addition, aircraft were 
needed to replace equipment rapidly 
approaching obsoletion. The situation 
called for prompt action if the air arm 
was to avoid virtual disarmament, but 
the need for haste did not cancel the 
necessity for procuring aircraft of supe- 
rior performance. For this reason air 
arm officials decided to follow the same 
procurement method used during the 
previous several years. They negotiated 
production contracts with manufacturers 
who built aircraft of the highest known 
performance, justifying their action by 
affirming that the manufacturer of a su- 
perior aircraft was a sole source as de- 
fined in Army Regulation 5-240. On 
this basis the Chief of the Air Corps for- 
warded a number of contracts to the 
Assistant Secretary of War for routine 
approval before obligating the available 
PWA funds. 

To understand the Assistant Secre- 
tary's reaction to the Air Corps request 
one must be aware of the particular cir- 
cumstances of the period. From the 

83 House Rpt 1506, 73d Cong, zd sess, May 7, 34, 
pp. 2-3, and House Hearings on WD appropriation 
for 1935, Feb ruary i f;, 1934, p. 564. 

64 See above p. 66. 



moment the new administration took 
office in 1933, officials of the War De- 
partment were under an increasing pres- 
sure from various groups seeking a share 
in the contracts at the disposal of the 
government. Federal contracts, once 
shunned, were now sought. Labor 
unions and business leaders in dozens 
of communities urged the Secretary of 
War to pursue a spread-the-work pol- 
icy. 65 Aircraft manufacturers were no 
exception to the rule. 66 As the depres- 
sion's bite cut deeper, the pressure upon 
the War Department reached the point 
where it could no longer be ignored. 
Just at this juncture the Air Corps sent 
up the contracts that had been negoti- 
ated to obligate the PWA funds. On 
the heels of the unsigned contracts came 
two disgruntled manufacturers to com- 
plain at being left out when the War 
Department had $7,500,000 to spend on 
production model airplanes. 67 The As- 
sistant Secretary, fully aware of the po- 
tential danger of their complaints ut- 
tered in the prevailing "merchants of 
death" milieu, refused to approve the 
negotiated contracts. Instead, he de- 
cided to reconsider the whole question 
of air materiel procurement and its un- 
derlying principles. 

The dilemma confronting the Assist- 
ant Secretary was very real. On the one 
hand he must be sure to obtain aircraft 



65 For examples of the pleas reaching the War 
Dept, see Members o£ the Bristol, Pa., Exchange and 
Rotary Club to Senator J. J. Davis, 15 Jul 33, and 
Davis to SW, 17 Jun 3a, as well as G. B. Cole, Secre- 
tary Local 18886 Aeronautical Workers National 
Union, to SW, zi Dec 34, WFCF 004.4 Manufactur- 
ing, 1939 file. 

66 Annual Rpt of SW, 1934, p. 27, and House Rpt 
1506, 73d Cong, 2d sess, May 7, 1934, p. 9. 

6 * House Hearings on WD appropriation for 1935, 
February 15, 1934, pp. 487, 514-15, 519. 



130 



BUYING AIRCRAFT 



capable of the maximum known per- 
formance, while on the other he must 
somehow contrive to retain effective 
competition as to price. Here was the 
selfsame difficulty that had confronted 
the Lampert and Morrow investigators. 
How could the Assistant Secretary rec- 
oncile the mutually exclusive ends of 
price and performance? 

Furthermore, the Assistant Secretary 
must maintain a large number of air- 
craft manufacturers in a financially 
healthy condition as an essential na- 
tional resource for future periods of 
emergency. If he attempted to spread 
the available funds more or less evenly 
over the industry in an effort to ensure 
economic health, how could he contract 
for aircraft of maximum performance 
at the minimum price? Airplanes pur- 
chased on the basis of price competition 
might lower the cost to the government 
but would afford no guarantee as to per- 
formance. Conversely, airplanes pur- 
chased solely on the basis of perform- 
ance might well and often did cost more 
than airplanes purchased with competi- 
tion as to price. In either case the ob- 
jective of a healthy industry would be 
ignored, for whether there was compe- 
tition as to price or performance, the 
greatest volume of business tended to 
cluster as a few efficient firms attracted 
more business than they could handle 
with dispatch while many other idle 
firms rolled to the edge of bankruptcy. 
What procurement procedure could the 
Assistant Secretary devise to resolve all 
the conflicting requirements that had 
troubled air arm officers and congress- 
men for nearly a generation? 

At first, Assistant Secretary Woodring 
believed that the rules governing fed- 



eral procurement in general should be 
applied to air materiel. Further study 
persuaded him, as it had so many other 
ardent advocates of competition before, 
that air materiel constituted a special 
case. Which is not to say, however, that 
he conceded his position on competition 
entirely. 

In reply to Mr. Woodring's queries, 
Air Corps officials claimed that negoti- 
ated contracts were absolutely necessary. 
If they were forced to buy superior air- 
planes competitively, to be sure of buy- 
ing the best, they would have to write 
up a specification that more or less de- 
fined the best known aircraft of any 
given type. This, they protested, would 
play directly into the hands of the man- 
ufacturer who had perfected a particu- 
lar airplane. He and he alone could 
bid effectively. Clearly, such a proce- 
dure would defeat the desire of the As- 
sitant Secretary to ensure competition. 
Fortunately for the future of the service, 
under the Assistant Secretary's prodding, 
several Air Corps officers managed to 
work out a procedure for getting around 
this difficulty. And they did so before 
3 January 1934, when the second session 
of the 73d Congress opened. The As- 
sistant Secretary's new policy was thus 
formed before the agitations in Congress 
led to so much investigation of the Air 
Corps. 

The solution contrived by the air arm 
officers was a relatively simple one. They 
proposed to let each manufacturer bid 
on his own specification, and to inject 
the necessary element of competition 
they included a speed requirement. But 
instead of specifying the maximum 
known high speed or the high speed de- 
sired, they stipulated a minimum high 



PROCUREMENT UNDER THE AIR CORPS ACT 



131 



speed. Manufacturers submitting en- 
tries offering top speeds lower than the 
minimum established in the invitation 
would be rejected. The advantage of 
this arrangement is evident: it permitted 
competition as to performance while at 
the same time excluding all but those 
within a narrow margin of the desired 
performance. 

Furthermore, by limiting competition 
to those manufacturers who had previ- 
ously submitted an aircraft (similar to 
the one they placed in competition) for 
test and approval by the staff at Wright 
Field, the air arm could eliminate any 
bidder whose aircraft was structurally 
unsafe or failed to comply with the re- 
quirements of the Aircraft Designer's 
Handbook regarding the incorporation 
of standardized accessories and the like. 
Finally, by requiring bidders to submit 
a physical sample for test, those who 
evaluated bids would no longer be trou- 
bled with paper promises that failed to 
materialize. Henceforth, evaluation of 
bids for production contracts was to be 
based on actual performance of the sam- 
ple airplane as tested in flight. 

The Assistant Secretary of War thus 
came to the Hill early in 1934 prepared 
to report that he had a new policy al- 
ready in effect. He would approve ne- 
gotiated contracts under Section 10k of 
the Air Corps Act only for the procure- 
ment of experimental aircraft. For pro- 
duction contracts he would insist upon 
competition, using the provisions of Sec- 
tion lot as legal authorization. Here- 



after, he assured the congressmen, com- 
petition was to be the watchword. 
Where there was a conflict between 
price and quality, if the aircraft of high- 
est performance was not the low bidder, 
the Secretary could avail himself of that 
provision in lot authorizing him to 
make an award on his own discretion 
"to the best advantage of the Govern- 
ment." By insisting upon the submis- 
sion of physical samples of aircraft the 
Secretary could rest his decision upon 
reports of performance actually demon- 
strated rather than solely upon a manu- 
facturer's paper claims. Taken all to- 
gether, the various elements of the new 
procurement policy appeared to have 
resolved the basic difficulties of air ma- 
teriel procurement. 

Perhaps the most important attribute 
to the new policy had nothing to do 
with its intrinsic characteristics but 
rather with its timeliness. When the 
Assistant Secretary appeared before a 
committee of Congress, which was irate 
over the alleged profiteering of the air- 
craft industry, he held an excellent tac- 
tical position. He could say that the 
War Department was already complying 
with the committee's wishes. Congress 
need not legislate because the adminis- 
tration's policy provided virtually every 
safeguard the critics in Congress de- 
manded. In short, Assistant Secretary 
Woodring managed to forestall amend- 
ment of the Air Corps Act because he 
took the wind out of the congressional 
sails. 



CHAPTER VI 



Aircraft Procurement on the Eve of 
World War II 



The New Policy Reconsidered 

Broadly considered, the new procure- 
ment policy contrived in 1934 by War 
Department officials under the goad of 
congressional criticism had one main 
characteristic: insistence upon competi- 
tion. Competition was to apply in the 
procurement of individual experimen- 
tal aircraft no less than in the procure- 
ment of production quantities. In con- 
tracts for aircraft in production quanti- 
ties the real novelty introduced by the 
new policy was the requirement that all 
bids be accompanied by a physical sam- 
ple of the aircraft to be evaluated. Rig- 
orous competition among sample air- 
planes was to be the watchword of the 
day. With this in mind, Air Corps offi- 
cers during 1934 sent out circular pro- 
posals to the industry, inviting the sub- 
mission of bids and samples. 1 

While eager to secure the broadest 
kind of competition, procurement offi- 
cers had to make every effort to ensure 
a high degree of standardization. Since 
the bids were invited on the basis of 
a performance specification only, each 

1 Service Sec, Proc Div, ATSC, Prewar Procure- 
ment by the Air Corps, undated [c. 1946], ICAF Doc 
file, pp. 12-13. See also, Mat Div Bull No. 30, 30 Aug 
35, AF Doc R&R Br, Doc 13/US/n. 



manufacturer was entirely free in the 
matter of design. Without some guid- 
ance by the Air Corps such a policy 
could, over a period of years, result in 
a heterogeneous collection of equip- 
ment. To impose a degree of uniform- 
ity and standardization, procurement 
officers provided each bidder with sub- 
stantial instructions in the form of the 
Handbook for Aircraft Designers, the 
Air Corps standards book, as well as an 
index of all pertinent Army, Navy, and 
federal specifications for materials and 
subassemblies. Moreover, bidders were 
required to use government-furnished 
equipment (GFE) for many accessory in- 
stallations. Thus instruments, armament, 
oxygen, communications, and other items 
could be standardized. The GFE, along 
with engines and propeller installations 
often amounted to half the cost of the 
complete aircraft. 2 By concentrating pro- 
curement of GFE in Air Corps hands, it 
was possible to ensure a high degree of 
uniformity and interchangeability and 
to improve the quality of competition as 
well. By reducing the number of varia- 
bles in the various sample aircraft offered, 
the area of competition was narrowed 
and became commensurately fairer. 

2 House Hearings on WD appropriation for 1935, 
p. 566, 



AIRCRAFT PROCUREMENT ON THE EVE OF WORLD WAR II 



133 



Premature Boasts 

The Secretary of War was enthusiastic 
over the new policy for aircraft procure- 
ment. Although by his own admission 
more than two years and a full cycle of 
procurement would have to pass before 
any judgment on the new policy would 
be possible, scarcely twelve months after 
issuing the first circular proposal for a 
sample aircraft competition, the Secre- 
tary was ready to praise the new proce- 
dure. He reported to Congress that the 
new policy brought out more rather than 
fewer bidders as some critics had feared. 
In addition, the samples submitted 
showed remarkable advances in perform- 
ance over the types currently standard- 
ized in the Air Corps. About ten months 
later, in June 1936, he reiterated his con- 
tention that the policy was a success. In 
the following year the Assistant Secretary 
of War spoke out just as emphatically. 
He stressed the "salutary effect" of the 
sample aircraft competition and declared 
the policy "fully justified." 3 

There were, no doubt, some apprecia- 
ble gains attributable to the wave of con- 
gressional criticism and the new policy 
formulated as a consequence. Probably 
the most obvious gain appeared in the 
improved procedures hammered out by 
procurement officers at Wright Field. 
Evaluation methods were standardized 
and made more objective. 4 Office rou- 

3 SW G. H. Dern to McSwain, Chairman, Com on 
Military Affairs, House, August 15, 1935, and Janu- 
ary 13. i93 6 . Con g Rcd > January 15, 1936, pp. 452- 
54; Annual Report of the Secretary of War, 1935, 
p. 8, and "Annual Rpt of the Assistant Secretary of 
War," in the Secretary's annual rpt for 1937, pp. 
26-27. 

4 Mat Div Office Memo [draft] 833, 19 Sep 34, 
WFCF 008 Proc; ESMR 50-74, 23 Apr 34, CADO WF, 



tines were formalized and procurement 
officers circularized the industry to in- 
form all bidders of the new procedures. 5 

Another gain directly attributable to 
the trials and tribulations of 1934, al- 
though somewhat less immediately a part 
of the new policy, concerned legislation. 
After 1934 Air Corps officers displayed 
a keener appreciation of the need for 
facing proposed legislation squarely. 
Rather than depend upon off-the-cuff ar- 
guments mustered in the Washington 
headquarters against bills threatening to 
upset air arm procurement methods, Air 
Corps officials learned to send such meas- 
ures to Wright Field. There, specialists 
familiar with the complexities of procure- 
ment could draft staff papers so well in- 
formed as to be overwhelmingly persua- 
sive. When Representative McSwain 
offered a bill early in 1935 that seemed 
apt to alter the air arm's procurement 
policy adversely, the success of the new 
procedure was evident. A logical, infor- 
mative staff paper in the form of a memo- 
randum report drafted at Wright Field 
provided the basis for a convincing reply 
by the Secretary of War that helped 
forestall passage of the measure. 6 

Though the new procurement policy 
of 1934 and 1935 did improve procedures 
and raise standards of objectivity in eval- 
uation, avoiding some of the worst as- 
pects of the aircraft procurement used 



Doc 13/107. For a glimpse of the confusion charac- 
terizing procurement earlier, see ESMR 50-12, 17 
Feb 32, CADO WF, Doc 13/87. 

s AC Policy 168, 17 Sep 35, Digest of AC Policies, 
OCAC, AF Doc R&R Br, and 2d Ind JAG to ASW, 
13 Nov 34, JAG (Army) Gen Reds Sec 400.12. 

6 See ESMR 50-12, Addendum 3, 1 Apr 35, CADO 
WF, Doc 13/87, for comments on McSwain's H.R. 
6810, 74th Cong, 1st sess, and ASW to McSwain, 
25 Apr 35, JAG (Army) Gen Reds Sec 452.1 Aircraft. 



134 



BUYING AIRCRAFT 



before 1934, a number of problems still 
remained to be solved. One such cen- 
tered around the relationship of perform- 
ance and price. While the new proce- 
dures for evaluation improved the degree 
of objectivity possible in determining the 
merits of two or more samples as to per- 
formance, how could price be equated 
with performance? To which bidder 
should an award go when one brought 
in a markedly superior aircraft at a price 
considerably higher than the price quoted 
by his rival with an admittedly inferior 
aircraft? If performance alone was to de- 
termine the selection, the manufacturer 
who knew his sample to be superior could 
inflate his price and profit unreasonably. 
When the Air Corps set out to procure 
transport aircraft during 1934 just such 
a problem as this came up, and in answer- 
ing the questions raised, air arm officers 
brought the procurement process a long 
stride forward. 

The Transport Case 

During August 1935 the Air Corps is- 
sued a circular proposal on a transport 
aircraft, calling for bids returnable in the 
following year. Three manufacturers, 
Douglas, Curtiss- Wright, and Fairchild 
submitted fully acceptable bids and sam- 
ples, which were evaluated under the new 
procedures. Douglas, with 786 points, 
won first place in the competition. Cur- 
tiss- Wright, with 692.5 points, and Fair- 
child, with 599.7 points, lagged far 
behind, so an order for a production 
quantity of transports went to Douglas. 
The new procurement policy seemed to 
be working smoothly until the time ar- 
rived to pay the contractor. When Doug- 
las' contract was submitted for approval, 



the Comptroller General held up pay- 
ment on a complaint from Fairchild. 
Upon investigation the Comptroller 
found that while the Douglas sample had 
indeed won the competition in terms of 
performance, the Douglas bid of $49,500 
was nearly twice as high as those of 
Curtiss- Wright's $29,500 and Fairchild's 
$29,150. In a competition for produc- 
tion quantities of aircraft, the Comptrol- 
ler felt that there could be "no proper 
evaluation" where price was disregarded. 
Unless the practice of ignoring price were 
curbed, the Comptroller held, it would 
be possible for a manufacturer whose 
sample exceeded those of his competitors 
by a very few points or a narrow margin 
of superior performance, to win a con- 
tract even though his bid was way out 
of line on price. 7 

Here once again the Comptroller Gen- 
eral was raising the question that had so 
vexed the framers of the Air Corps Act 
of 1926. Which was more important, 
performance or price? If one bought on 
price alone, then one could not command 
superior weapons. If one bought on per- 
formance alone, then one could not be 
certain of securing a low price. In rais- 
ing this question anew, the Comptroller 
appeared almost to be unaware of the 
years of discussion already spent on this 
very point. More significantly, in rais- 
ing the question in the precise terms he 
did, the Comptroller appeared to display 
a lack of understanding of the importance 
of superior performance in the aircraft 
purchased for military use. In comment- 
ing on the competition between Douglas, 

7 Text of Compt Gen decision of February ig, 
1 9%G> given in 1036 U.S. Aviation Report 268. See 
also, Compt Gen to SN, December 16, 1935, quoted 
in Cong Red, March 23, 1936, p. 4201. 



AIRCRAFT PROCUREMENT ON THE EVE OF WORLD WAR II 



135 



DC-2 Transports in Production at Douglas Santa Monica plant, June 1934. 



the high bidder, and Fairchild, the low 
bidder, the Comptroller found fault be- 
cause the contract went to Douglas even 
though the performance of the Fairchild 
sample was "far in excess of the mini- 
mum" performance required by the terms 
of the circular proposal. That an air- 
craft merely "in excess of the minimum" 
required was poor economy indeed when 
matched against an enemy aircraft de- 
signed at the utmost limit of the art 
seems to have escaped the Comptroller's 
notice. 

A further review of the facts raises ad- 
ditional doubts as to the Comptroller 
General's appreciation of the problem at 



hand. To begin with the initial circular 
proposal had announced that the "figure 
of merit," or performance rather than 
price, would be the "primary considera- 
tion" in making the award. Thus the 
bidders knew before they entered that 
the competition would center around 
performance and not price. Moreover, 
much of the disparity in price between 
the Douglas entry and those of the other 
two companies was rendered irrelevant 
by the fact that the Douglas entry was a 
twin-engine transport whereas both the 
other competitors offered single-engine 
designs. Further, the Douglas sample at 
the time of the competition was already 



136 



BUYING AIRCRAFT 



in production as the DG-2 (Air Corps 
C-32), the immediate lineal predecessor 
of the famous DC-3, or C-47, the work- 
horse of World War II fame. In fact, 
the sample evaluated was actually bor- 
rowed by Douglas for that purpose from 
a commercial airline customer. 

Even so, the Comptroller's protests 
could not be ignored. To secure the 
materiel essential to the air arm, officials 
in each echelon of the procurement or- 
ganization had to meet the challenge 
represented by the Comptroller's opinion. 
The differing reactions of officers in the 
several organizations concerned with pro- 
curement not only provide a cross-section 
appraisal of the many points of view re- 
garding the nature of aircraft procure- 
ment but also spell out the complexities 
of that process. 

At Wright Field the officers who helped 
evaluate the sample aircraft in the trans- 
port competition were men in close con- 
tact with tactical operations. They were 
in many instances the men who would 
themselves use the equipment purchased. 
They had no doubt about what they 
wanted. The Douglas aircraft was supe- 
rior, so they selected it as the winner 
even though it was more expensive. In 
short, the pilots in the field wanted the 
best available. 

In Washington, the Chief of the Air 
Corps viewed matters in a somewhat dif- 
ferent perspective. As the individual re- 
sponsible for the success or failure of air 
arm operations, the Chief of the Air Corps 
was understandably reluctant to buy the 
more expensive Douglas aircraft when to 
do so meant getting eighteen units rather 
than the thirty-six originally contem- 
plated when the budget was set up nearly 
two years earlier. This in turn would 



mean falling further than ever behind 
the authorized strength established for 
the air arm. While the Chief of the 
Air Corps undoubtedly wanted the best 
equipment he could get, he could not ig- 
nore the annual hearing on appropria- 
tions where he must face congressional 
critics who would demand to know why 
the arm failed to reach aircraft strength 
authorized after Congress had so gener- 
ously appropriated funds in the preced- 
ing year. Beside the general influences 
that would work upon any Chief of the 
Air Corps, there was a particular consid- 
eration operating upon the incumbent 
officer during 1935. After the excoria- 
tion of General Foulois by the Rogers 
Committee, the Chief of Air Corps, anx- 
ious to avoid the charge of "deliberate, 
willful and intentional violations of the 
law," was under great pressure to award 
on the basis of price rather than perform- 
ance. Understandably he did so recom- 
mend, but when the Secretary of War 
overruled him in favor of the superior 
Douglas aircraft 8 he was free from at- 
tack and so approved the award to Doug- 
las that the Comptroller subsequently 
challenged. 

The issue, then, was clearly drawn. 
On the one hand the Comptroller Gen- 
eral held that the air arm's competition 
was illegal because it failed to provide 
any means of establishing the exact rela- 
tionship between performance and price, 
thus leaving the award entirely to a com- 
petition on performance. The Secretary 
of War, on the other hand, held that any 
arbitrary formula that evaluated price 



8 For general resume of this affair, see G. Brown, 
Development of Transport Airplanes and Air Trans- 
port Equipment, WFHO, 1946, pp. 70-73. 



AIRCRAFT PROCUREMENT ON THE EVE OF WORLD WAR TI 



137 



along with performance would deprive 
the Secretary of the discretion legally 
vested in him by Section lot of the Air 
Corps Act of 1926. While the Secretary 
might, if he so desired, give price a greater 
or lesser weight in evaluating bids, he 
maintained that the discretion entrusted 
to him by Congress in lot was specifically 
intended to permit flexibility in making 
awards in order to serve the best interests 
of the air arm. 9 

The conflict of views between the Sec- 
retary and the Comptroller posed an in- 
teresting constitutional problem. The 
Comptroller General was the agent of 
Congress; the Secretary of War was the 
agent of the President. If either had 
chosen to take his case to his superior, a 
difficult question of legislative and execu- 
tive relationship might have arisen. For- 
tunately, Congress has provided a some- 
what simpler solution for more routine 
questions by authorizing appeals from 
such conflicts to the Attorney General. 
The Secretary of War therefore presented 
his case to the Attorney General for a 
ruling. In addition to the relevant facts, 
he described the chaos that would result 
from a reversal and concluded, "Should 
you be forced to decide the question pre- 
sented adversely to the views of the War 
Department, I hesitate to predict the ef- 
fect upon National Defense. . . ." 10 Four 
months later the Attorney General ruled 
substantially in favor of the Secretary of 
War. 11 Douglas, which had long since 
completed deliveries of the transports, at 



9 The Secretary's position was ably formulated in 
5th Ind, JAGO to SW, 27 Oct 36, JAG (Army) Gen 
Reds Sec 400.12. 

10 SW to Atty Gen, 28 Dec 36, JAG (Army) Gen 
Reds Sec 400.1a. 

11 39 °P Att Y Gen 2 3. A P r 'I 9> >937- 



last received its money. 12 Thus a pro- 
curement project begun in August 1934 
finally reached completion sometime af- 
ter April 1937. Much of this delay seems 
attributable to the failure of the Comp- 
troller General to appreciate the latitude 
given to the Secretary of War under the 
terms of the Air Corps Act of 1926. 

In another case of interest to the Air 
Corps, the Comptroller also apparently 
ruled without fully grasping the problem 
in hand. Toward the end of 1934 the 
Comptroller held up payment on an air- 
craft contract on the grounds that it had 
been improperly awarded. He ruled 
that there had been ample time since the 
passage of the Air Corps Act in 1926 for 
the air arm to determine specifications 
for the airplanes it required. In eight 
years, the Comptroller implied, the Air 
Corps should have had more than enough 
time to prepare specifications and blue- 
prints "down to the last wire ... or the 
last bolt. . . ." Such specifications would 
permit all qualified manufacturers to 
compete on price, declared the Comp- 
troller, and there would be no need for 
evaluations permitting charges of "favor- 
itism and fraud" in the award. 13 This 
opinion clearly assumed that aircraft de- 
signs were static rather than dynamic, 
that once one achieved an acceptable de- 
sign it could be frozen for procurement 
purposes. But in aircraft design the 
preparation of detailed specifications and 
drawings down to the last bolt is impos- 
sible. Procurement officers knew that no 
War Department personnel could prepare 



12 Memo, Capt Park Holland, OASW, for Maj 
F. P. Shaw, JAGO, 9 Feb 37, JAG (Army) Gen Reds 
Sec 400.12. 

1 3 Compt Gen to SW, 12 Dec 34, JAG (Army) Gen 
Reds Sec 163 Bids. 



138 



BUYING AIRCRAFT 



such drawings. If such drawings were 
possible, the Secretary of War noted, they 
would actually restrict rather than en- 
courage competition since it would be 
necessary to specify a particular airplane 
previously proven to meet the needs of 
the air arm. A particular airplane 
would, of course, be the design of one 
manufacturer who would thus gain an 
enormous advantage in any competi- 
tion. 14 

Since all disbursements are ultimately 
subject to the approval of the Comptrol- 
ler General, it is obviously imperative 
for those who wish their procurement 
projects to move along without delay to 
learn to live with the Comptroller Gen- 
eral and the General Accounting Office. 
Awareness of this may have motivated 
Air Corps officials to reach an agreement 
while the Douglas case was still pending. 
The Comptroller had insisted that price 
should be formally evaluated in the com- 
petition; the Secretary of War had con- 
tended that he had an express grant of 
discretion to weigh price as he saw fit. 
Although the Attorney General ulti- 
mately ruled on the Douglas case in favor 
of the War Department, procurement of- 
ficers recognized that the problem of price 
would continue to be a point of criticism 
in the Accounting Office. They arranged 
with the Comptroller, therefore, to in- 
clude price as a factor for evaluation in 
all future competitions. 

The formula contrived to satisfy the 
Comptroller was simple but ingenious. 
After determining a figure of merit on 
the basis of performance, the figure was 
to be divided by the dollar cost bid by 



14 SW to Compt Gen, undated draft by OCAC, re- 
vised by JAGO, JAG (Army) Gen Reds Sec 163 Bids. 



the manufacturer. The resulting price 
factor would favor the bidder with the 
lowest price and the highest perform- 
ance. 15 In conceding this point, how- 
ever, War Department officials insisted 
that discretion still rested with the Sec- 
retary—there would be no determination 
of the winner "by a purely mathematical 
formula." The figure of merit and the 
price factor together would serve as a 
guide to the Secretary, who nevertheless 
remained free to make an award to other 
than the winning bid combination of 
price and performance provided there 
were substantial reasons for so doing, 

If the new arrangement helped allay 
congressional criticism and if it led air- 
craft manufacturers to feel they were get- 
ting fair play, it was probably a success. 
But the relationship of price and per- 
formance was an aspect of Assistant Sec- 
retary Woodring's new procurement pol- 
icy that raised other significant difficulties 
when put into practice. 

Drawbacks of the New Policy 

Although the top political officials of 
the War Department boasted of the suc- 
cess of the new procurement policy that 
substituted competition for negotiation 
in the award of aircraft contracts, the 



is Memo, Exec, OASW, for CofS, 17 Aug 36, SW 
and OASW files, AC Gen Questions, item 363. For 
description of price-performance formula, see CofAC 
to OSW, 4 Feb 37, JAG (Army) Gen Reds Sec 400.12, 
11 Nov 35 file. See also, Mat Div Bull No. 31, 29 Aug 
36, AF Doc R&R Br, Doc 13/US/13, and Bull No. 
30A, 1 Jul 39, entitled Proc Policy and Proce- 
dure . . . , AFCF in AC Project Reds (Lyon Papers), 
Book 56. The Navy had concocted a price-perform- 
ance formula at least four years earlier, but there 
is no evidence that Navy experience was studied by 
Air Corps officials. See Mat Div BuAer, to Asst 
Chief, BuAer, 7 Mar 3a, in Delaney Hearings. 



AIRCRAFT PROCUREMENT ON THE EVE OF WORLD WAR II 



139 



Chief of the Air Corps was more cautious. 
He preferred to withhold judgment until 
extended experience decided the issue. 18 
As events were to prove, his caution was 
fully justified. 

Under the new policy, with its empha- 
sis on competition, experimental con- 
tracts involved a return to the use of de- 
sign competitions as authorized by Section 
10a et seq. of the Air Corps Act in prefer- 
ence to negotiated contracts under 10k. 
Procurement officers, from their un- 
happy experience immediately following 
the passage of the Air Corps Act in 1926, 
knew that the design competition was a 
virtually unworkable system for purchas- 
ing experimental aircraft. Nonetheless, 
they were driven to return to the design 
competition at the insistence of the Mili- 
tary Affairs Committee and its chairman, 
Representative McSwain. 17 

Early in 1935 the Air Corps sent out 
circular proposals on a design competi- 
tion for a pursuit aircraft. In May six- 
teen bids were opened. During the next 
five months the several evaluating boards 
did their work, and in September the 
Secretary of War announced the award- 
ing of a contract to the Wedell-Williams 
Air Service Corporation, which had pre- 
sented the winning design. In the mean- 
time another manufacturer had presented 



18 Testimony of Gen Foulois at House Hearings on 
WD appropriation for FY 1936, January 29, 1935, 
pp. 558-60. 

17 For influence of Military Affairs Com on WD 
policy, see Gen Pratt to E. P. Warner, 10 May 34, 
WFCF 008 Proc. See H.R. 6810, 74th Cong, 1st 
sess, March 18, 1935, and McSwain to SW, 19 Mar 35, 
JAG (Army) Gen Reds Sec 452.1 Aircraft. See there 
also, ASW to McSwain, 25 Apr 35, and SW to Presi- 
dent, undated draft by JAGO, indicating the meas- 
ure proposed by McSwain was sufficiently dangerous 
to justify seeking Presidential aid in defeating it. 



not only a design but a sample aircraft at 
Wright Field with actual flight perform- 
ance superior even to the paper promises 
of the Wedell-Williams design. The su- 
periority of the airplane was in large 
measure attributable to a new and more 
powerful engine that appeared on the 
market after the Wedell-Williams bid 
had been received. 

To proceed with a contract for con- 
structing an experimental aircraft accord- 
ing to the winning design was obviously 
futile. When Wedell-Williams began to 
redesign its aircraft to utilize the newly 
developed engine, the Judge Advocate 
General raised objections. An award 
could not legally be made for such a 
modified design without obvious detri- 
ment to the other competitors. Where- 
upon, procurement officers determined 
to cancel the design competition award 
entirely and negotiate for the modified 
Wedell-Williams design, using the pow- 
ers conferred by Section 10k. However, 
Wedell-Williams, convinced that the air- 
plane had no future, subcontracted the 
job, thus defeating a major purpose of 
the Air Corps Act— to encourage firms 
with design staffs rather than "produc- 
tion only" shops. 

Here was the ultimate absurdity. If 
the design competition, Section 10a et 
seq. j was to be used to avoid the favor- 
itism alleged to color the use of negoti- 
ated experimental contracts (Section 10k), 
but 10k had to be used to bail out the 
shortcomings of the design competition, 
then surely the design competition, was 
unworkable. After three failures in 1926 
and 1927, procurement officers had 
avoided the use of design competitions 
until driven to try four more during 1935. 
Two others in a modified form were tried 



140 



BUYING AIRCRAFT 



during 1938. Significantly, none of the 
aircraft used in World War II had its in- 
ception in a design competition. 18 In 
1935 Air Corps procurement officers once 
again reached the conclusion of 1927: 
paper promises to perform were mean- 
ingless. The design competition was un- 
workable. 

The clear failure of the design com- 
petition in the matter of experimental 
contracts served only to emphasize the 
importance of the sample aircraft com- 
petition in determining the success or 
failure of the new procurement policy of 
the War Department with regard to pro- 
duction contracts. Yet here, too, depart- 
mental officials found complications and 
obstacles. The sample aircraft competi- 
tion proved difficult to administer. The 
procedure, it will be recalled, involved 
the mailing of a circular proposal con- 
taining type specifications in terms of the 
minimum performance acceptable. This 
left the maximum performance to the 
skill of the designer, who was required to 
demonstrate the attainments of his design 
by actual flight performance with a sam- 
ple aircraft. 

To ensure absolute fairness to all com- 
petitors, procurement officers ruled that 
after a manufacturer entered a competi- 
tion he was to receive no help whatsoever 
from officers at Wright Field. On the 
surface this appeared to be a sensible 
safeguard, but in practice it led to a whole 
train of adverse consequences. The rul- 
ing prevented Wright Field engineers 
from making suggestions that would im- 
prove designs. Worse yet, by requiring 

19 This whole account of the design competition 
story is taken from Prewar Procurement by the Air 
Corps, by Service Section, Procurement Division, 
Air Technical Service Command, pages 8-11. 



Air Corps officers to ignore the manufac- 
turer entirely until the sample was actu- 
ally flown to Wright Field for evaluation, 
the air arm was denied an opportunity of 
studying the aircraft in the mock-up stage, 
where numerous flaws in design might 
have been remedied easily. 19 Modifica- 
tions introduced after the plane reached 
Wright Field for evaluation could be ef- 
fected only through change orders— tedi- 
ous and expensive amendments of the 
contract. 

A further drawback inherent in the 
sample competition was the necessity of 
drafting the invitation or circular pro- 
posal comprehensively enough to allow 
the widest possible freedom to the de- 
signer yet explicit enough to bring in bids 
suited to the requirements of the air arm. 
If the invitation was insufficiently ex- 
plicit the bidders would have no way of 
knowing just what was desired; if the 
invitation was too explicit, it would stul- 
tify innovations in design. 

Yet another difficulty cropped up in 
the sample competition. Samples were 
to be used only for production or quan- 
tity contracts. Since the needs of the 
service required that the winner be put 
into production as soon as possible, it 
was assumed that the samples submitted 
would be fully developed airplanes ready 
for production. But to win the compe- 
tition, manufacturers were under pres- 
sure to submit aircraft embodying new 
design features that by their very novelty 
were not proven by long use in service. 
Thus competitions intended to attract 
production models brought in what 

19 A mock-up is a dummy aircraft of full scale 
erected before fabrication of the first flying model. 
It is used to assist in planning the location of parts 
and accessories. 



AIRCRAFT PROCUREMENT ON THE EVE OF WORLD WAR II 



141 



amounted to experimental models in- 
stead, which is to say that using the sam- 
ple competition for production contracts 
virtually converted production contracts 
into experimental ones. 20 

A major criticism leveled against the 
new procurement policy by air arm offi- 
cers was the high cost involved in its 
administration. The Chief of the Air 
Corps, preferring the negotiated contract, 
was undoubtedly more than ready to mus- 
ter arguments showing the excessive cost 
of managing competitions. Yet even if 
these defensive arguments are discounted, 
it was indeed expensive to hold competi- 
tions. At times the mere list of bidders 
circularized ran to eighty mimeographed 
pages. It mattered little that 95 percent 
of these firms never responded with bids. 
To satisfy Congress that competition pre- 
vailed, all must be circularized. Sending 
out proposals and evaluating bids neces- 
sitated an annual payroll of more than 
sixty thousand dollars, not to mention the 
diversion of engineers from research and 
development projects to work at evaluat- 
ing competitions. 21 

The high costs of the new procurement 
policy were not confined to administra- 
tive charges. Manufacturers found the 
sample aircraft a costly proposition to 
build, especially when a contract failed 



20 The difficulties mentioned here as well as many 
others are discussed in memo for files by Maj J. P. 
Dinsmore, JAGD, a Nov 34, JAG (Army) Gen Reds 
Sec 400.12. See also, JAG (Army) Gen Reds Sec 156 
Claims, 23 Jun 36, passim. Some Wright Field views 
are contained in ESMR 50-74, Addendum 3, 14 Jun 
34, and ESMR AG-51-20, 18 Jun 34, both in WFCF 
008 Proc. 

21 Engr Sec Office Memo 182, 12 May 34; Maj A. J. 
Lyon to Maj C. W. Howard, 7 Sep 34; Chief, Mat Div, 
to CofAC, 1 Nov 34. All thru in WFCF 008 Proc 

Policy. 



to materialize and the entire investment 
had to be absorbed from company funds. 
During the decade of the thirties airframe 
costs increased between threefold and 
fourfold. 22 In addition to the impact of 
social legislation and rising labor costs, 
the advancing complexity of aircraft 
structures drove costs upward. As the 
average number of items on contract in- 
creased, unit costs fell, but tooling costs 
rose rapidly, thus requiring a heavier 
initial outlay by manufacturers. As air- 
frames grew heavier and more compli- 
cated, the time for fabrication stretched 
out from a few months to more than two 
years in some cases. The step from twin- 
engine bombers to four-engine bombers 
marked th e most spectacular rise in costs. 
\(Table 6) As the decade of the thirties 
advanced, manufacturers who undertook 
to build sample aircraft on the chance of 
recouping their losses with the award of 
a government contract risked larger and 
larger sums of money. 

Almost everyone concerned with the 
building of military aircraft began to 
issue dire predictions about the future 
of the aircraft industry if the War De- 
partment persisted in its sample aircraft 
policy. Brokers interested in raising 
capital for the industry warned their cli- 
ents that manufacturers were becoming 
"increasingly reluctant" to risk entrance 
into competitions. If unsuccessful, a 
manufacturer might lose his entire in- 
vestment since the possibility of finding 
a purchaser other than the government 
for a highly specialized military aircraft 
was limited at best. On the other hand, 
manufacturers were virtually driven to 



22 Mat Div Budget Officer to CofAC, 12 Jun 34, 
AHO Plans Div 145.93-260. 



142 BUYING AIRCRAFT 



Table 6 — Comparative Cost of Two-Engine and Four-Engine Bombers 





Martin 


Douglas 


Boeinp 




B-10B 


B-18 


YB-17 




103 


82 


13 




£72,000 


3105,000 


2302,100 


Airframe cost with changes 


45,450 


72,243 


246,030 


G F E cost 


13,650 


16,957 


23,261 




6,500 


8,200 


8,200 




13,000 


16,400 


32,800 



Source: Exhibit A, 2d Ind, Chief, Info Div, OCAC, to Chief, Mat Div, 29 Apr 36, WFCF 121.6 Cost of Airplanes. The price Jump 
between the twin-engine B-18 and the four-engine B— 17 would be reduced somewhat if like quantities were considered, hut the spread 
between the two would still remain great. 



enter competitions, for failure to do so 
might leave a firm far behind its com- 
petitors in technical development. 23 

The complaints leveled by brokers, 
manufacturers, and others against the use 
of sample aircraft competitions were, of 
course, special pleading by partisans. On 
the other hand, air arm officers who were 
partisans only for superior equipment 
raised similar objections to the system. 
In the Navy, where the Bureau of Aero- 
nautics procured aircraft under a sample 
competition not unlike that of the Air 
Corps, there were like complaints. The 
bureau chief was apprehensive over the 
declining number of bidders who cared 
to risk capital on a sample aircraft. With 
good reason, manufacturers shied from 
such risks. In one competition for a rela- 
tively light aircraft, a dive bomber, two 
firms bid with prices around |8o,ooo 
whereas one actually spent $125,000 and 
the other actually spent $200,000 devel- 



23 Harding, Aviation Industry, pp. 6-8; Callery, 
"Review of American Aircraft Finance," Air Affairs 
(Summer 1947), p. 484; Aviation Industry in the VS., 
pp. 98-162; Manual of Magazine of Wall Street 
(March 6, 1937), p. 43. 



oping the samples. 24 Such heavy outlays 
could and did on occasion drive firms 
toward bankruptcy when they failed to 
win production contracts. 25 

The sample competition had hardly 
been fairly tried before the Chief of the 
Air Corps suggested the danger lurking 
in the policy. Of ninety-odd circular 
proposals sent out inviting the submis- 
sion of a sample bomber for competition, 
only one firm replied. 26 By the end of 
fiscal year 1936 the Chief of the Air Corps 
was anxious to try possible expedients for 
shoring up the faltering policy. He ques- 
tioned whether manufacturers could af- 
ford to lose more than two competitions 
in a row, if that many, and recommended 
changes in the procurement system to al- 
leviate the difficulty. 27 A year later man- 
ufacturers were displaying a decided 
lack of interest in government busi- 



24 Testimony of Rear Adm E. J. King in House 
Hearings on Navy Dept appropriation for 1936, 
March 13, 1935, pp. 543, 547. 

25 Remarks of Senator R. S. Copeland, Cong Red, 
March 18, 1936, p. 3934. 

26 Testimony of Gen Foulois, House Hearings on 
WD appropriation for 1936, January 1935, p. 560. 

"Annual Rpt of CofAC, 1936, AFCF 319.1. 



AIRCRAFT PROCUREMENT ON THE EVE OF WORLD WAR II 



143 



ness. Improved conditions in the business 
world and growing sales to commercial 
airlines no doubt contributed to this situ- 
ation but, the Chief of the Air Corps felt, 
so did the procurement methods of the 
air arm. 28 During 1938 and 1939 procure- 
ment officers continued to urge changes 
in the sample competition. Now, how- 
ever, their requests had become de- 
mands. Changes in procurement proce- 
dures "must" be adopted, they claimed, 
for it was becoming impossible to get 
competition. The sample aircraft repre- 
sented "an insuperable barrier" to manu- 
facturers, whose capital resources were 
too slender to permit "an undertaking 
frought with such risk of financial loss." 29 

The War Department Seeks 
a Solution 

Since air arm officers and industry 
spokesmen continued their barrage of 
objections to the costly sample competi- 
tion, War Department officials were com- 
pelled to give the question some atten- 
tion. If the policy was really unworkable 
and changes proved necessary, the War 
Department would be thrust into an em- 
barrassing position. The civilian Secre- 
taries, it will be recalled, had gone way 
out on a limb in declaring the new policy 
a success. Perhaps their declarations were 
politically necessary at the time, but hav- 
ing praised the policy loudly, they were 



28 Lecture at Army War College by Brig Gen 
O. Westover, Materiel Division Developments of Fis- 
cal Year 1937, WFCF 350.001 Lectures. 

28 Chief, Legal Br, to Chief, Proc Sec, 10 Feb 38, 
AFCF 032, 1926, and R&R, Comment 2, Chief, Sup- 
ply Div, OCAC, to Exec, 17 Mar 39 same file. See 
also, Memo, Budget Officer (Mat Div) for ASW, Feb 
gg, WFCF 111.3 Expansion Program. 



in a poor position to ask for its revision. 30 
Whether for political or other reasons, 
the faults in the administration of sample 
aircraft competitions continued to be a 
cause of agitation well into the crisis pe- 
riod before the outbreak of World War 
II in 1939, and repeated attempts were 
made to meet the difficulties. 

The Air Corps made the first attempt. 
Procurement officers proposed to conduct 
the sample competition as usual and 
award a contract to the winner under 
Section lot. Then, if the second and 
third ranking samples in the competition 
proved to be designs of exceptional value 
only slightly less desirable than the win- 
ning aircraft, these could be purchased as 
experimental aircraft under the author- 
ity of Section 10k at negotiated prices. 31 
The prices paid for the second and third 
ranking aircraft would necessarily be less 
than the sum paid the winner and might 
not even cover the full cost of construct- 
ing the samples, but the mere possibility 
that there would be some reward to 
others beside the winner was expected to 
lure in more bidders on each competition. 
Thus, purchasing the best of the losers 
would serve not only to sharpen rivalry 
and create superior weapons for the air 
arm but at the same time would strength- 
en the industry financially and provide 
the nation with a greater productive ca- 
pacity in time of war. 

Though the Air Corps plan had advan- 
tages insofar as the competitors were con- 
cerned, the advantages were offset by 
defects from a budgetary standpoint. 
Funds for production contracts (lot) 



30 6th Ind, JAG to SW, 1 Jun 37, JAG (Army) Gen 
Reds Sec 400.12. 
»iCofAC to G-4, 19 Mar 37, AFCF 112.4A. 



144 



BUYING AIRCRAFT 



came from one budget while funds for 
development contracts (10k) came from 
another. Thus the purchase of the sam- 
ple competition winner in quantity 
would be on the production budget while 
any money paid out for the second and 
third place samples in the same contest 
would have to come from the research 
and development budget. 32 

With Congress anxious to build up the 
air arm to authorized strength, appropria- 
tions for production contracts were easier 
to secure than those for research. Air 
arm officers would have preferred to buy 
the second and third ranking items from 
the easier-to-get funds, but legal consider- 
ations blocked the way. Appropriations 
for production contracts carried a man- 
datory clause ordering that "not less 
than" a given figure be spent. If the sec- 
ond or third ranking samples failed to 
materialize or contained no features 
worth buying, the War Department 
could find itself with earmarked funds 
unspent at the end of the fiscal year. This 
would be damaging if the Air Corps 
sought larger appropriations the follow- 
ing year since many congressmen tended 
to regard unspent funds as a presumption 
of padded estimates rather than as evi- 
dence of economical spending. 

If, on the other hand, procurement 
officers used research and development 
funds to buy the runners-up in a sample 
competition, they encountered other vex- 
ations. To divert research funds to the 
sample aircraft contest was to rob re- 
search in order to provide what amounted 
to a subsidy for the industry. Since the 
second and third ranking samples were 



3 - TAG to CofAC, u Apr 38, and 1st Ind, OCAC to 
TAG, sa Apr 38, AFCF 38 1 .9A. 



avowedly production models, their value 
for experimental use was highly special- 
ized at best and often not at all in the 
area of research most needing money. 

Thus, the Air Corps plan for making 
sample competitions workable turned out 
to be of dubious merit. While the rem- 
edy could be applied to advantage, the 
administrative drawbacks accompanying 
it suggested that some other expedient 
must be devised. 

Several aircraft manufacturers, feeling 
themselves to be relentlessly driven to 
the wall by the excessive costs of sample 
aircraft, came forward during 1938 with 
suggestions of their own. Probably the 
most elaborate plan was that of Reuben 
H. Fleet, president of the Consolidated 
Aircraft Corporation. Once a procure- 
ment officer in the Air Service, Fleet had 
for many years taken an active interest 
in procurement problems and the gen- 
eral question of legislation dealing with 
the air arm. 

Although Fleet presented several pro- 
posals, they all boiled down to one cen- 
tral idea: legislation should be enacted 
to authorize the War Department to pro- 
cure aircraft in production quantities by 
negotiated contracts rather than by sam- 
ple competitions. Since to have favored 
Fleet's proposals would have put the Air 
Corps in the position of favoring the 
practice of negotiation so stigmatized by 
Congress, the War Department recom- 
mended against the proposal. 83 The lan- 
guage of the War Department rejection 
was obviously calculated to allay any sus- 



33 Memo, Capt Holland, OASW, for Gen Arnold, 
12 Feb 38; Chief, Legal Br, Proc Sec, to Chief, Proc 
Sec, Mat Div, 10 Feb 38; SW to A. J. May, 21 Feb 38, 
draft by Plans Div, OCAC. All in AFCF 032 1926. 



AIRCRAFT PROCUREMENT ON THE EVE OF WORLD WAR II 



145 



picion in Congress that the department 
might still harbor a desire for negotiated 
contracts in preference to competition. 
This solicitude for congressional opinion 
may well have been necessary, neverthe- 
less it may be significant that Congress- 
man McSwain had died, and a new in- 
cumbent with a somewhat different atti- 
tude toward public contracts presided 
over the House Military Affairs Com- 
mittee. 

Though the officials of the various 
echelons concerned with aircraft pur- 
chases believed it expedient to reject 
Fleet's proposed amendment, they could 
not drop the matter there. Other pro- 
posals to amend would surely follow, and 
Congress might take unfavorable action. 
There had to be some solution and soon, 
for the sample competition policy seemed 
on the verge of breakdown. In at least 
one instance, a medium bomber project, 
plans for a competition were canceled 
when procurement officers found that not 
one manufacturer was willing to bid. 31 

Confronted with a knotty problem of 
policy, leaders in the War Department 
resorted to a traditional Army expedient, 
appointing a formal board of officers to 
study the question and report a solution. 35 
The board met and gathered evidence. 
Air Corps officials and numerous individ- 
ual aircraft manufacturers presented tes- 
timony on their respective points of view. 
For the industry as a whole the Aeronau- 
tical Chamber of Commerce offered a 
series of recommendations— an example 
of the useful collaboration between an 



3 * Memo, Exec, OASW, for ASW, 6 Jul 38, OASW 
files, AC Proc Board, 1938. 

35 Proceedings of the board, 8 Jul 38, et seq., OASW 
files, AC Proc Board, 1938. 



industry lobby and the War Department, 
which was to prove most fruitful in the 
war crisis soon to arrive. The revised 
procurement procedure ultimately rec- 
ommended by the board was an amalgam 
of the various suggestions and proposals 
made on every hand. 

Essentially, the board recommended 
what amounted to a compromise between 
the advantages of the sample aircraft com- 
petition and those of the design contest. 
It recommended that before issuing cir- 
cular proposals for aircraft in quantity, 
the Air Corps should invite manufactur- 
ers to submit designs for evaluation. One 
or more designs would then be awarded 
experimental contracts (10k) for the con- 
struction of one or more aircraft. Simi- 
larly, the authority of 10k could be used 
to purchase the design data of the losers 
where warranted by the nature of the 
design. While all bidders could not be 
assured compensation for the engineer- 
ing data submitted with their bids, the 
mere idea that some return was possible 
to firms other than the winner of first 
place was expected to encourage manu- 
facturers to enter competitions that they 
might otherwise have avoided. 

Increasing the number of bidders in 
military aircraft competition was, of 
course, one of the major objectives sought 
by the board, but there were other ad- 
vantages anticipated from the proposed 
scheme. Detailed type specifications 
would not be prepared for quantity pro- 
curement until after the design winner 
or winners passed the final mock-up 
stage. This would permit air arm offi- 
cers to exchange ideas freely with the 
manufacturers and to suggest changes 
during the period of construction with- 
out risk of showing favoritism to any one 



146 



BUYING AIRCRAFT 



competitor. Finally, after garnering all 
the best design ideas of the design com- 
petition, the Air Corps could issue a cir- 
cular proposal for a sample aircraft to be 
offered in competition by manufacturers 
seeking to supply aircraft in production 
quantities. The manufacturer offering 
a sample aircraft with superior perform- 
ance could normally expect to win a pro- 
duction contract. Competitors were not 
confined to winners of the design com- 
petition. Any manufacturer who could 
afford to build a sample aircraft meeting 
the required specifications could submit 
a bid. 

The board expected other advantages 
to accrue from the revised procedure. By 
subsidizing at least one and sometimes 
several experimental airplanes in the first 
phase of the new routine, the War De- 
partment would provide an assured sup- 
ply of bidders for production proposals. 
At the same time, by leaving the sample 
aircraft contest open to all bidders, no 
one could protest that full free competi- 
tion had been denied. In retaining the 
requirement of a sample aircraft in pro- 
duction competitions, the board pre- 
served the best feature of this system of 
procurement: objective evaluation based 
on actual performance. 

Although the purchase of design data 
and subsidizing of the construction of 
winning designs would involve a consid- 
erable increase in initial costs, the plan 
was expected to make great savings by 
reducing the number of change orders 
authorized after the contract had been 
signed. This was one of the persuasive 
arguments offered in support of the 
board's proposed scheme. Air arm offi- 
cers would get more nearly the design 
they wished, and get it cheaper, while 



manufacturers would get into produc- 
tion with fewer delays. 36 

During October 1938 the Chief of Staff 
approved the board's proposal for a re- 
vised procurement procedure and urged 
a like course upon the Assistant Secre- 
tary. 37 If given time, the War Depart- 
ment might have gone ahead to perfect 
a highly workable system of procurement 
that was both fair to the industry and 
acceptable to those critics in Congress 
who insisted upon the fullest competi- 
tion. But the War Department was not 
to be given time. The revised procedure 
had scarcely been drafted when the crisis 
that was to end in war shattered all hope 
of an orderly evolution in aircraft pro- 
curement methods. 

Peacetime Procurement: A 
Retrospect 

What general observations appear to 
stand out from a twenty-odd year survey 
of procurement methods? What conclu- 
sions appear to be so obvious as to lie 
virtually beyond dispute? To begin 
with, it is highly significant that the Air 
Corps was still seeking to improve its 
procurement procedures when the crisis 
came. Even the briefest of surveys over 
twenty years of aircraft procurement 
shows that the process was essentially a 
matter of resolving conflicting objectives 
and mutually exclusive ends. To such 
a fundamental question as whether or not 
contracts should have been let by negotia- 
tion or by competition, experience over 
the years showed that there could be no 



30 See G-4 Memo for CofS with G-g and WPD 
concurring, 10 Oct 38, AFCF 452.1- 
^ Ibid. 



AIRCRAFT PROCUREMENT ON THE EVE OF WORLD WAR II 



147 



clear-cut answer. Each method had its 
advantages, each had its shortcomings. 
While low price was of importance, so 
too was superior quality. Equally impos- 
sible to decide was the conflict between 
strategic necessity on the one hand and 
the economic health of the aircraft indus- 
try on the other. Clearly, there were no 
black and white formulas or right and 
wrong means to employ. Resolving mu- 
tually exclusive ends involved compro- 
mises. 

Yet, conceding the existence of diverg- 
ing ends or goals, there still remained the 
question of means, the matter of admin- 
istering the search for those ends. Ex- 
perience demonstrated again and again 
the importance of well-informed admin- 
istrators. Time after time breakdowns 
in the procurement process might have 
been avoided had those who adminis- 
tered the law been familiar with the pre- 
cise text of the statutes. The War De- 
partment and its subordinate echelons 
were of necessity in constant flux. Offi- 
cers seldom remained for long at any one 
post. Therefore, the formulation of 
standing operating procedures was even 
more essential in the Military Establish- 
ment than would be the case in many 
civilian organizations. But organization 
by itself is never enough. The best of 
procedures will not operate efficiently 
without well-informed, assertive officials 
willing to accept political responsibility. 
They must select legal advisors who are 
resourceful and imaginative, advisors who 
will find legal ways in which desirable 
ends may be secured rather than prolif- 
erate arguments to show why a given 
course may not be followed. 

The need for well-informed and able 
administrators was not confined to the 



higher echelons of the War Department. 
The need for assertive, imaginative offi- 
cials extended clear down through all 
those echelons at Wright Field, where 
procurement took place. Effective pro- 
curement called for imaginative officers 
who could devise procedures above criti- 
cism by the Comptroller General, the 
General Accounting Office, and a host 
of disgruntled competitors. In sum, 
the ideal in procurement administration 
called for officials who could get what 
the necessities of defense required and 
still stay within the law. 

All of which leads to yet another ques- 
tion. What was the law concerning pro- 
curement? Early in 1939 an attorney-at- 
law wrote to the War Department asking 
for information on the rules and regula- 
tions governing aircraft procurement. 
An Air Corps officer detailed to prepare 
a reply simply referred the attorney to 
the Superintendent of Documents for a 
copy of the Air Corps Act of 1926. The 
officer who sent this amazing answer may 
have been naive, ignorant, or merely 
lazy— clearly "the law" of procurement 
was only the beginning. Every statute 
upon the books was encrusted with an 
intricate overlay of judicial decisions, 
Judge Advocate General and Attorney 
General opinions, and Comptroller Gen- 
eral rulings as vital to the procurement 
process as the statute itself. 

In short, statutes were only the visible 
portion of a most intricate process whose 
very complexity made tampering essen- 
tially dangerous. To change a statute is 
to upset an elaborate and delicate mech- 
anism. After a statute has remained 
upon the books for any considerable pe- 
riod it accumulates not only rulings, 
opinions, and decisions, but in addition 



148 



BUYING AIRCRAFT 



it becomes the core for a number of ad- 
ministrative procedures that only ex- 
tended experience can perfect. A con- 
gressman may be entirely sincere in prof- 
fering a bill to end some abuse, real or 
alleged, in the procurement system, but, 
if passed, his bill may actually do more 
harm than good. If the record of air- 
craft procurement between the wars 
shows anything at all, it reveals the im- 
mense difficulties attending every effort 
to change the laws. If air arm officials 
had been able to make this circumstance 
clear to all legislators, the cause of na- 
tional defense might have been greatly 
enhanced. 

Clearly "the law" is a most subtle con- 
cept. The same statute may remain on 
the books over a period of many years 
and yet be a very different matter one 
year from another. The organic statute 
of the air arm, the Air Corps Act of 1926, 
was just such a law. A great deal depends 
upon who is to administer it. A change 
in administration, even without con- 
scious decision by the President, may 
mean a drastic alteration in the spirit in 
which an act is interpreted. Changes 
other than political also work subtle dif- 
ferences in the law. The Air Corps Act 
was drafted before the technical revolu- 
tion of the late twenties had altered the 
whole structure and scale of the aircraft 
industry. After this revolution wrought 
profound changes in the industry, the 
Act of 1926 no longer meant the same 
thing that it had when first written. An 
act conceived for a large number of 
relatively small firms now operated upon 
a very different type of industry led by a 
handful of major producers. 

Perhaps the most important conclu- 
sion to be drawn from the history of 



twenty years of aircraft procurement is 
that no conclusions can be drawn; there 
are no formulas, no cut and dried rules 
to follow in every case. Procurement 
methods that work in one era may be ut- 
terly unworkable in another. The cor- 
porate character of the industry changes, 
the mood of the Congress changes, and 
a new President enters the White House. 
Conclusions drawn on the situation of 
1938 might well be no longer valid in 
1968. The same congressmen who in- 
sisted upon stringent economy and com- 
petitive procurement in 1934 may well 
have voted billions for defense while 
joining the clamor for negotiated con- 
tracts to speed the placement of contracts 
in 1941. 

The record further suggests the critical 
importance of studying the whole pro- 
curement process rather than isolated 
segments. As late as March in 1940, 
when the threat of war was hovering over 
the nation, the Secretary of War boasted 
that his system of procurement had re- 
sulted in aircraft "superior to any in the 
world." 38 Japanese Zeroes and German 
Messerschmitts were soon to raise some 
doubt regarding the Secretary's view. In 
defense, the rejoinder might be offered 
that the triumphant B-17 was a product 
of the Secretary's "sample" competition 
and should on its record vindicate his 
methods. The war record of the B-17, 
the Boeing Flying Fortress, cannot be de- 
nied, but the success of the B-17 does not 
prove the utility of the "sample" procure- 
ment policy. The B-17 was indeed a 



38 Hearings of Senate Military Affairs Com on S 
Res 244, 76th Cong, 3d sess, March 28, 1940, p. 3. 



AIRCRAFT PROCUREMENT ON THE EVE OF WORLD WAR II 



149 




Comparative Size of B-17 (upper) and XB-15 (lower). 



private venture submitted by the manu- 
facturer as a bid in a sample competition, 
but a further probing after facts reveals 
that before the B-17 came the XB-15, 
also a four-engine bomber, an experi- 
mental project sponsored and paid for 
by the Air Corps. The design experi- 
ence derived from the XB-15 made the 



B-17 possible. 39 To weigh the sample 
competition apart from its context is to 
distort the record and draw conclusions 
from half truths. In short, there is no 
ideal formula for aircraft procurement. 



30 Draft of annual report for Mat Div, p. 9, 27 Aug 
8, AFCF 32 1.9 Annual Rpt. 



CHAPTER VII 

Planning for Industrial Mobilization 



The Problem 

Probably no aspect of the nation's ex- 
perience in World War I seems less suc- 
cessful than the record of War Depart- 
ment procurement. The Army, trained 
for little more than garrison duty, sud- 
denly found itself expanded to a force of 
several million men. To equip this 
force for the exigencies of modern war- 
fare called for the purchase of nearly 
three-quarters of a million different types 
of items. The War Department was un- 
prepared for such a program. 

Within the Army alone, half a dozen 
agencies began to compete with each 
other for the services of manufacturers 
who could provide the items needed. 
Taking all the government procurement 
agencies together, by the war's end there 
were literally hundreds of different con- 
tract forms in use. Each had its peculi- 
arities involving special interpretations. 
As a consequence, war contracts filled the 
federal courts with costly litigation for 
decades after the armistice. And the 
price of unpreparedness cannot be reck- 
oned in dollars alone. Delays in produc- 
tion cost lives. 

Because the War Department had to 
formulate its requirements after the out- 
break of World War I, many leading con- 
tractors were barely able to reach produc- 
tion before the war ended. The sudden 



rush of orders that belatedly hit the na- 
tion's manufacturers led to a wild scram- 
ble for the limited available supply of 
raw materials. Acute shortages devel- 
oped in several key materials and prices 
rose alarmingly. Marked fluctuation of 
price levels reflected the impact of war 
on the national economy. Manufactur- 
ers fortunate enough to receive munitions 
contracts absorbed all available materials 
or labor and profited. Others, less for- 
tunate, were driven out of business. Even 
the firms with war contracts found it dif- 
ficult to attain capacity production. As 
soon as one shortage seemed solved, others 
appeared to upset hoped-for schedules. 
Bottlenecks in transport, in power, and 
in machine tools all rose to delay the total 
mobilization effort. In the scramble, the 
Army bid against the Navy for the na- 
tion's productive capacity, war contrac- 
tors competed with one another for the 
nation's resources, and the nation as a 
whole paid heavily for its unprepared- 
ness. 

Out of the chaotic experience of utiliz- 
ing the nation's potential in World War I 
came the realization that the preparations 
for war must be carefully thought out in 
advance. There had to be a mobiliza- 
tion plan if the mistakes of the past were 
to be avoided. And beyond the plan, 
all agreed, administrative machinery had 
to be created to regulate the flow of the 



PLANNING FOR INDUSTRIAL MOBILIZATION 



151 



nation's economy under the abnormal 
stress of war. 

The War Department and 
Industrial Mobilization 

The National Defense Act of 1920 
gave legal recognition to the need for in- 
dustrial mobilization planning. Section 
5a placed the task squarely on the shoul- 
ders of the Assistant Secretary of War. 1 
Although the job of procurement plan- 
ning for wartime posed enormous diffi- 
culties, by the middle thirties the Office 
of the Assistant Secretary of War had 
carried the task a long step forward. 2 
The objectives to be achieved were rec- 
ognized; the problems to be solved were 
defined. All that remained was the ac- 
tual business of filling in the details that 
would give substance to a mobilization 
plan. 

The work of filling in the details fell 
to organizations for the most part within 
the Office of the Assistant Secretary of 
War. The Assistant Secretary delegated 
his statutory obligation for industrial mo- 
bilization planning to a Planning Branch 
in his office staffed by civilian employees 
and Army officers. To ensure a supply 



1 41 Stat 764, June 4, 1920. For an extended dis- 
cussion of the various plans contrived by the War 
Department to erect a civilian superagency on the 
skeletal planning staff of OASW, see Harold W. 
Thatcher, Planning for Industrial Mobilization: 
1920-1940, QMC Historical Studies, 4 (Washington, 
1943, reprinted 1948). See also R. Elberton Smith, 
The Army and Economic Mobilization, UNITED 
STATES ARMY IN WORLD WAR II (Washington, 
'959)- ch. II. 

2 The following resume^ of OASW planning is 
based on the several mobilization plans and on 
Harry B. Yoshpe, Study of Experience in Industrial 
Mobilization in World W r ar II, Army Industrial Col- 
tege, 1945- 



of trained officers for this assignment, the 
Assistant Secretary sponsored a special 
training school, the Army Industrial Col- 
lege. But Army activity in economic 
planning, no matter how intelligently 
executed, could not alone solve the prob- 
lems raised. Soon after the Planning 
Branch began to function, it became evi- 
dent that, to be realistic, all planning 
must include the Navy despite the silence 
of the 1920 Defense Act on this point. 
To offset this statutory deficiency, the 
Secretaries of War and Navy by admin- 
istrative action created the joint Army 
and Navy Munitions Board (ANMB), 
which became the authoritative source 
of joint mobilization plans. The bulk 
of the detailed spadework continued to 
be performed by the Planning Branch 
of OASW and its naval counterpart. 

By 1931, with the publication of the 
Industrial Mobilization Plan prepared 
the year before, the phase of trial and 
error was over, and detailed planning be- 
gan in earnest, As more information 
accumulated, new problems and compli- 
cations emerged. Modifications in con- 
cept and procedure were necessary. Sub- 
sequent revisions of the plan, appearing 
in 1933, 1936, and 1939, sought to obvi- 
ate the shortcomings of earlier versions. 

The planners learned much from their 
study of World War I, but as they began 
to fill in the details of their initial plans 
they gradually came to realize that they 
had set up impossible goals. Subsequent 
revisions— for example, the so-called Pro- 
tective Mobilization Plan— scaled down 
the size of the force to be put into uni- 
form immediately following the outbreak 
of war, after staff studies revealed that 
the nation's facilities simply could not 
get the desired items of equipment in the 



152 



BUYING AIRCRAFT 



desired quantities within the time ini- 
tially believed possible. Perforce, the 
planners revised their conception of mo- 
bilization to fit the facts. 3 This alone 
may have justified the entire planning 
effort, but its usefulness certainly ex- 
tended beyond the matter of changing 
perspectives. Probably of equal impor- 
tance was the opportunity to perfect op- 
erating procedures. 

Over the years of the "Long Armis- 
tice," the mobilization planners worked 
out a number of fundamental procedures 
to provide for an orderly economic mobi- 
lization in time of war. Among other 
things, this involved taking steps to pre- 
vent the scramble of purchasers that oc- 
curred in World War I, overloading some 
districts or regions of the country and 
ignoring others. The planners sought to 
apportion the load as evenly as possible 
across the various regions of the nation 
so all could share the benefits and the 
burdens. 

"Apportioning the load" involved hav- 
ing some means of measuring the pro- 
ductive capacity of any given facility. 
This led the planners to perfect their 
administrative tools and define their 
terms still further. After some experi- 
menting they hit upon the scheme of as- 
suming the output of a plant in a normal 
eight-hour day to be 100 percent. Then, 
assuming a war situation, the plant 
would work three shifts around the clock. 
Allowing a margin for tool changing, 
cleaning time, and so forth, the planners 



3 Compare the conception of mobilization pre- 
sented by Woodring, in "Report of the Assistant Sec- 
retary of War," Annual Report of the Secretary of 
War, 1936, page so, with that of Louis B. Johnson, 
"Report of Assistant Secretary of War, 1938," ibid., 
page 20. 



reasoned that any given facility had a to- 
tal capacity in wartime of 250 percent of 
its normal output. By arbitrarily re- 
serving 50 percent of any facility's normal 
production for civilian use, this left some 
200 percent of normal productive capac- 
ity to be assigned to military production. 

Equipped with this measuring stick, 
procurement planning officers of the 
various arms and services surveyed indi- 
vidual facilities by the thousands and 
returned their findings to the Planning 
Branch in OASW. Where their reports 
showed that more than one service was 
bidding for the productive capacity of 
any facility, the Planning Branch for- 
mally "allocated" that plant, earmarking 
its production for one or another of the 
services. Where conflicts with the Navy 
appeared, the joint Army and Navy Mu- 
nitions Board reconciled the rival claims 
by assigning the disputed facility to a "re- 
served" status in which the board doled 
out capacity on an ad hoc basis. By the 
eve of World War II the Directory of 
Allocated and Reserved Facilities pub- 
lished by OASW contained over 10,000 
separate facility listings. Each listing 
represented a means of safeguarding 
against the concentration of orders that 
so impeded production in World War I. 

Concentration of contracts was only 
one of many evils. Another was the 
manufacturers' all too frequent lack of 
familiarity with the military items they 
were expected to produce. Ideally, an 
educational order was the best way to 
familiarize manufacturers with unusual 
military items; however, in the absence 
of funds to finance more than a very few 
such orders, the mobilization planners 
did the next best thing. They co-oper- 
ated with manufacturers in drawing up 



PLANNING FOR INDUSTRIAL MOBILIZATION 



153 



an "accepted schedule." This was not a 
contract but a statement of the quanti- 
ties and rates at which a specific item 
would be required. To explore the pos- 
sibilities of actually meeting this sched- 
ule, the planners further co-operated 
with the manufacturers in drawing up 
"factory plans" that attempted to outline 
the steps necessary to convert to military 
production and to formulate a statement 
of the labor, materials, and so forth re- 
quired in the event of war. 

Although the Defense Act of 1920 
charged the Assistant Secretary of War 
with responsibility for mobilization plan- 
ning, much of the work was actually 
delegated and redelegated in the twenty- 
odd years between the wars. However, 
one major division of labor is evident. 
The Assistant Secretary and his immedi- 
ate staff assumed responsibility for pro- 
viding the conceptual framework of mo- 
bilization and undertook to establish 
rules and procedures to co-ordinate pro- 
curement and control the national econ- 
omy in time of need. On the other 
hand, most of the detail of surveying, 
planning, and scheduling was left to the 
individual arms and services. Only in 
this context is it possible to appraise the 
role of the Air Corps in the field of mobi- 
lization planning. 

The Air Corps Organization 
for Mobilization Planning 

Just as the Assistant Secretary of War 
delegated his statutory obligation for mo- 
bilization planning, so too did the Chief 
of the Air Corps. Since air arm mobili- 
zation was largely concerned with mate- 
riel, the problem inevitably fell into the 
sphere of the Materiel Division, which 



unlike the other units of the Office, Chief 
of Air Corps, was physically located at 
Wright Field near Dayton, Ohio. Thus, 
an Industrial Planning Section (IPS) at 
Wright Field shouldered the special tasks 
of industrial mobilization planning im- 
posed by the Assistant Secretary's direc- 
tives. 4 

Standing instructions charged the offi- 
cers of IPS with "continuous study" to 
familiarize themselves with the nation's 
industrial resources, new processes, and 
developments that might affect the pat- 
tern of mobilization. 5 In actual practice, 
the officers assigned to the Industrial 
Planning Section found themselves 
swamped by the sheer volume of routine 
administration without taking on added 
burdens of "continuous study." In the 
main, their work involved the task of 
keeping the details of the mobilization 
plan current, utilizing the reports sent in 
by the Procurement Planning District 
representatives who operated in six geo- 
graphical regions centered around New 
York, Buffalo, Cleveland, Detroit, Chi- 
cago, and Los Angeles. 

The fundamental work of procurement 
planning was really done by the district 
officers. It was they who met the indi- 
vidual manufacturers face to face. It was 
they who surveyed a facility and filled out 
Form 100, the standard information sheet 
that went forward through IPS at Wright 
Field to the Planning Branch in OASW, 
where the over-all mobilization plan was 
constructed. Aside from such obvious 
information as the location of the facil- 



* For a representative view of the Materiel Division 
agency for mobilization planning, which evolved 
slowly over the years after 1920, see Mat Div Indus- 
trial Planning Cir No. 803-1, 25 May 37. 

5 Ibid., p. 4. 



154 



BUYING AIRCRAFT 



ity being surveyed, a roster of its key offi- 
cials, its organization, its financial status, 
its production record, and the like, the 
reports returned from the districts went 
into considerable detail where manufac- 
turers agreed to accept a schedule of pro- 
duction in an emergency. Such reports 
gave descriptions of the manufacturing 
methods to be used, compiled a bill of ma- 
terials, and listed subcontractors whose 
services would be required. 6 

Although the district representatives 
surveyed literally thousands of facilities, 
not every survey resulted in a factory plan 
or an accepted schedule. There were so 
many items to be handled that only the 
most critical, those most intricate or those 
most difficult to manufacture, were car- 
ried all the way through the detailed plan- 
ning and scheduling stage. For many 
items only an informal plan and schedule 
seemed necessary. This was especially 
true of commercial items that offered no 
manufacturing difficulties. Even items, 
for which a detailed plan might have 
been useful or helpful did not always get 
formal schedules. The Industrial Plan- 
ning Section was more than fully occu- 
pied in keeping plans up to date upon 
only the most critical items. 7 



a The operations of the district representatives are 
briefly described in Review of Methods Employed 
by the AAF in Estimating Productive Capacity and 
in Placing Production Schedules: 1922-1945, 15 May 
46, prepared by ATSC's Logistics Planning Div, Plans 
(T-5), ICAF. 

7 Keeping the plans current seems to have swamped 
others besides the planners in the Air Corps. In 
1936 the Assistant Secretary reported the task "Her- 
culean" and noted that three years after the appear- 
ance of the 1933 Mobilization Plan, the job of work- 
ing out the details on requirements had at last been 
completed. "Report of the Assistant Secretary of 
War," 1936, p, 21. 



Though the staff officers in IPS failed 
to complete a number of their plans and 
schedules, it is easy to find mitigating 
circumstances in their favor. They were 
perpetually understaffed. Air Corps au- 
thorities felt no urgency about mobiliza- 
tion plans, which they considered rather 
theoretical. Confronted with a chronic 
shortage of officers, the Air Corps gave 
first priority on manpower to tasks re- 
garded as more pressing and more impor- 
tant. Even had more officers been avail- 
able, they could not have been assigned 
to mobilization planning work because 
the appropriation acts passed during the 
decade before the war generally employed 
restrictive language that limited the plan- 
ning staff to its strength in previous years. 8 

Another consideration militating 
against effective mobilization planning 
was the difficulty encountered in estab- 
lishing a working harmony with the rep- 
resentatives of industry. Officers en- 
gaged in survey work found themselves 
at a disadvantage when dealing with in- 
dustrialists because of the wide differ- 
ences in their salaries. Since most of the 
officers conducting the surveys were in 
the lower pay brackets, it was not always 
easy for them to negotiate on equal terms 
with high-ranking officials of the nation's 
largest industrial firms. In addition, the 
planners were initially handicapped by 
standing instructions warning them 
against antagonizing manufacturers with 
too frequent requests for information, 
questionnaires, and so forth. All their 
relations with the manufacturers rested 
upon good will or the patriotic desire of 
individual businessmen to be co-opera- 



8 See, for example, Lt Col F. J. Riley to ASW, 
29 Mar 37, WFCF 381 Mobilization, 1939. 



PLANNING FOR INDUSTRIAL MOBILIZATION 



155 



tive. Businessmen were under no legal 
obligation to provide information, nor 
were they under any compulsion to per- 
mit surveys or to agree to "accepted sched- 
ules." Some manufacturers refused to 
sign schedules, although they might other- 
wise be co-operative, because they feared 
a recurrence of their mistakes in World 
War I. They recalled having accepted 
production goals they could not meet 
because they had failed to appreciate the 
rigid standards imposed by government 
specifications. Others may have refused 
to sign accepted schedules for fear of be- 
ing branded warmongers or merchants 
of death. Some manufacturers flatly re- 
fused to supply information on the 
ground that to do so would weaken their 
position vis-a-vis their competitors. At 
the other extreme there were manufac- 
turers who were quite willing to sign 
schedules that were hopelessly unrealistic. 
Since accepted schedules were not con- 
tracts and not legally binding, they could 
be signed with breezy irresponsibility. 
As a consequence, accepted schedules, 
duly signed and placed on file, often 
meant little or nothing. 9 

Under such circumstances, one can 
readily appreciate how difficult was the 
task confronting the officers working on 
the problem of industrial mobilization 
for the Air Corps. Nonetheless, in spite 
of many handicaps, the accomplishments 
of the Air Corps planners seemed sub- 
stantial. Over the years between the 
wars, the Industrial Planning Section at 
Wright Field accumulated vast files of 



For an excellent summary of the problems be- 
setting the planners, see AAF Hist Study 40, The 
Expansion of Industrial Facilities Under Army Air 
Force Auspices: 1940-1945, ATSC Hist Office, 1945, 
p. 16. 



information concerning the aircraft in- 
dustry in the United States. Hundreds 
of factory plans were on tap ready for 
use in converting the industry from a 
peace to a war footing. 

Thus, at least on the surface, the Air 
Corps appeared ready for M-day. There 
existed an organization, a staff, plans, and 
carefully recorded procedures for mobi- 
lization of the nation's aircraft industry. 
Yet when w r ar finally did come, virtually 
the entire planning effort evaporated: 
most of the planning and much of the 
accumulated data were either scrapped 
or ignored. If the past has any meaning 
at all for the present, surely one might 
inquire as to what mistakes were made 
that thought, foresight, and vision might 
have avoided. 

Air Corps Mobilization Planning 

Was the mobilization planning effort 
of the Air Corps a success or a failure? 
In the final analysis, the air arm was not 
prepared when the war came; the plans 
for mobilization were faulty and inade- 
quate. But before appraising the Air 
Corps' effort in procurement planning, 
it might be well to restate the problem. 
Leaving aside for the moment the mat- 
ter of creating economic controls for the 
nation's economy as a task to be per- 
formed by the Army and Navy Munitions 
Board and some civilian superagency to 
be set up for the purpose, the essentials 
of mobilization planning fall into two 
separate phases: first, the determination 
of requirements, both qualitative and 
quantitative, and, second, the location 
of adequate productive capacity to meet 
these requirements. While the Air Corps 
did contribute information leading to the 



156 



BUYING AIRCRAFT 



promulgation of requirements, final de- 
termination lay in the hands of the Gen- 
eral Staff and thus beyond air arm deci- 
sion. This in itself complicated the task 
of planning, but even more detrimental 
was the highly volatile nature of the vari- 
ables that entered into the computation 
of requirements. 

Take, for example, the matter of de- 
sign as a qualitative factor of require- 
ments. In the field of aviation the speed 
of technical change was, as the Secretary 
off War once remarked, "downright as- 
tonishing." 10 Each change in design in- 
volved some sort of recomputation of 
requirements. Since design change was 
continual, the computation of require- 
ments was forever unsettled; approved 
programs were always "about to be re- 
vised." Propeller blades offer a case in 
point. The mobilization plan of 1933 
listed blades as a critical contributory 
item, but the blades in discussion were 
made of wood. Shortly thereafter steel 
blades replaced wooden ones. Then hol- 
low steel forgings came into use. Finally 
variable-pitch designs began to elbow out 
fixed-pitch models. During this evolu- 
tionary sequence, imaginative and re- 
sourceful manufacturers with aggressive 
research staffs pushed ahead of less pro- 
gressive firms. 11 Each change in design, 
each new technique of production, and 
each newly formed company upset the 
calculations on requirements. 

Sometimes design change involved the 



10 Report of Secretary of War, 1935, p. 7. See also, 
comments of Maj Gen. O. Westover, CofAC, before 
industry representatives, 6 Sep 38, WFCF 381 Emer- 
gency Proc. 

11 See, for example, the rivalry described in ESMR, 
M-5 1-394, 13 Sep 37, WFCF 004.4 Manufacturing, 
!9S9- 



introduction of an entirely new item 
rather than development of an existing 
item. Fractional horsepower electric mo- 
tors are an example. They were virtually 
unheard of as aircraft appliances during 
the lggo's, yet during World War II each 
B-29 used over a hundred such units. 
Planners would have had to have been 
blessed with great prescience to have 
scheduled in advance such yet unknown 
requirements. 

The variables introduced by design 
changes alone, it would appear, were 
enough to make of requirements com- 
putation a well-nigh impossible task. 
Added to this difficulty were the further 
complications introduced by changes in 
doctrine. The between-war years were 
characterized by sharp disagreements as 
to the proper strategy and tactics of air 
power. Even amongst those most avid 
in their faith in aircraft there was dis- 
agreement as to the most effective form 
of weapon. The fighter school of thought 
vied with the bomber school, and advo- 
cates of heavily armed bombers argued 
with the advocates of fast, lightly armed 
bombers. As one or another of these 
groups gained dominance, requirements 
changed colorations. On the eve of 
World War II, for example, strategic 
plans called for 37 percent of the avail- 
able productive capacity to be reserved 
for observation aircraft. 12 When the war 
finally arrived, this whole class of aircraft 
proved unusable and was abandoned as 
a separate type. 13 

Design and doctrine were not the only 
fluid variables that troubled the calcula- 



12 Lt Col Farthing to Lt Col H. V. Hopkins, 7 Mar 
38, AHO Plans Div 145.93-183. 

13 Evolution of the Liaison-Type Airplane, 1917- 
1944, ATSC, 1945. 



PLANNING FOR INDUSTRIAL MOBILIZATION 



157 



tion of requirements. There were dif- 
ferences of opinion within the Army as 
to the proper method by which such cal- 
culations should be made. General Staff 
directives for the earliest mobilization 
plan laid down a standardized rate of 
manpower induction, to which muni- 
tions production was to be geared. Air 
Corps efforts to work out the details soon 
revealed the flaw in this approach. The 
proposed rate of induction far exceeded 
the most optimistic rate of aircraft deliv- 
eries to be expected from the existing 
industry. Since the dynamic state of air- 
craft design made it unfeasible to main- 
tain a large, ready reserve of aircraft to 
make up the difference between the rate 
of induction of manpower and the rate 
of production of equipment, some change 
in plan was essential. 

General Staff officers recognized the 
validity of the Air Corps criticism but 
protested that the proposed solution of 
delaying inductions until equipment was 
ready was "in conflict with the funda- 
mental concept of the War Department 
General Mobilization Plan," which was 
"based on personnel and not upon sup- 
ply and equipment." The Air Corps 
was ordered to comply with the War De- 
partment plan, "not through making the 
availability of equipment the determin- 
ing factor before new units are directed 
to commence their mobilization, but by 
reducing the requirements of Air Corps 
units in any period to a reasonable num- 
ber based on expectation of produc- 
tion." 14 



14 TAG to ColAC, 12 Jun 30, quoted in 1st Ind, 
OCAC to ACTS, 10 Feb 33, basic ACTS to OCAC, 24 
Jan 33, AHO Plans Div 145-93-165. 



Here was a major dispute over a fun- 
damental premise. General Staff officers 
used the traditional troop basis for cal- 
culating requirements. Yet the troop 
basis was an entirely inadequate formula 
upon which to determine aircraft require- 
ments, with the possible exception of cer- 
tain types of close-support equipment. 
Strategic and tactical necessity for air 
power, not the number of men mobilized, 
constituted the only effective basis for 
determining the major aircraft require- 
ments of the Air Corps. If the General 
Staff officers who established require- 
ments for the first mobilization plans 
based their calculations on strategic and 
tactical considerations at all, they empha- 
sized tactical or close-support aspects to 
the detriment of strategic functions. 
They insisted, for example, that the Air 
Corps should give "absolute" priority to 
observation aircraft for assignment to 
armies and corps. 15 

To be sure, the example cited above 
represents only a single episode in the 
early thirties. General Staff officers were 
not always so intransigent in their direc- 
tives on air power. Nonetheless, the il- 
lustration has a point— it shows the ab- 
sence of agreement upon the techniques 
to be employed in computing require- 
ments. And in the absence of such agree- 
ment another variable was introduced 
that worked to upset and confuse the 
orderly process of Air Corps mobiliza- 
tion planning. 

Thus, from the very outset, the Indus- 
trial Planning Section of the Air Corps 
was beset with virtually insurmountable 
difficulties. So many variables entered 
into the calculation of requirements that 

15 Ibid. 



158 



BUYING AIRCRAFT 



any planning rested upon foundations of 
sand. Planners were repeatedly forced 
to rely upon "educated guesses." 

The story of Air Corps planning for 
aluminum well illustrates the difficulties 
of working from uncertain assumptions. 
In 1932 after more than a decade of prep- 
aration for mobilization, the Air Corps 
still had no plan for this vital commodity. 
A civilian employed at Wright Field 
finally offered to work up a plan during 
his two weeks of active duty as a reserve 
officer. 16 In 1936 Air Corps officers were 
still computing the aluminum require- 
ments for the 1933 mobilization plan, but 
an entirely new plan, the revision of 1936, 
was soon to appear, invalidating much 
if not all of the calculations already made. 
In 1937 the requirement was still unset- 
tled, and air arm officers continued to 
make "educated guesses" rather than ex- 
act computations of the need for alumi- 
num. The dubious nature of this sort 
of data for planning purposes is even 
more obvious when one notes that even 
the "educated guess" disregarded such 
conditioning factors as the availability of 
skilled labor, raw materials, and machine 
tools, not to mention possible shortages 
in accessory equipment and delays aris- 
ing from the introduction of design 
changes during production. 17 

Despite the unknowns and the varia- 
bles with which they had to work, Air 
Corps planners had to go ahead and plan 
anyhow. They knew they were working 
with imponderables in search of solu- 



18 Chief, Materials Br, Mat Div, to S. N. Colby 
(Alcoa), 13 Jul 3a, WFCF 381 Mobilization, 1939. 

"Dir, Planning Br, OASW, to CofAC, 1 Nov 37, 
and 1st Wrapper Ind, OCAC to Chief, Mat Div, with 
Incls, 9 Nov 37, as well as 2d Wrapper Ind, Mat Div 
to CofAC, 3 Dec 37, AHO Plans Div 145.93-18S. 



tions to a hypothetical question. More- 
over, they knew full well that if war 
should break out they would be criticized 
for failing to come up with a smoothly 
operating plan. Staff officers in the In- 
dustrial Planning Section at Wright Field 
were like the one-eyed hunter who is 
standing in a fog and is asked to shoot 
with a broken gun at ducks he cannot see. 

Air Corps officers put into their plan- 
ning for wartime procurement much 
effort but not enough thought. They 
worked conscientiously and hard but 
tended to busy themselves largely with 
the routines of filling in details upon an 
existing conceptual framework. Rarely 
did they define their assumptions and 
even more rarely did they question those 
assumptions. On occasions when they 
did recognize the premises underlying 
their plans, they not infrequently failed 
to think them through to their ultimate 
implications. A review and appraisal of 
the major assumptions that underlay the 
Air Corps planning effort may help re- 
veal some of the planning officers' diffi- 
culties. 

A Healthy Industry: Key to Defense 

With air power, as with other forms 
of military might, preparedness may take 
one of two forms. A nation may choose 
to maintain an aerial fleet-in-being or, as 
an alternative, it may choose to rely upon 
its capacity to build an air fleet in time 
of emergency. The fleet-in-being or "Big 
Stick" form of preparedness has certain 
advantages. It can be used as a diplo- 
matic weapon to terrorize an opponent 
into surrender without a fight, as Hitler 
found. But at the same time, the fleet- 
in-being has serious limitations. Obso- 



PLANNING FOR INDUSTRIAL MOBILIZATION 



159 



lescence in aviation is so great that large 
numbers of old aircraft rapidly become 
relatively vulnerable to fewer aircraft of 
newer design and superior performance, 
as France found to her sorrow after the 
outbreak of World War II. In the 
United States, officers of the War Depart- 
ment in general and the Air Corps in par- 
ticular were firmly committed to a policy 
that emphasized the importance of ca- 
pacity to build, the importance of indus- 
trial potential, the power to create and 
replenish an air force, rather than a fleet- 
in-being. This idea was repeatedly pro- 
mulgated formally as official doctrine on 
many occasions. 18 Nevertheless, the im- 
plications of the policy were not thought 
out to their further limits. 

Educational orders constituted but one 
of the several means by which the Air 
Corps could have helped assure the ex- 
istence of a strong and healthy industry 
ready to climb to peak output soon after 
receiving orders for items in mass-pro- 
duction quantities. An educational or- 
der is an order designed to familiarize a 
manufacturer with the item he will be 
expected to produce in an emergency. 
In its simplest form, an educational order 
might involve little more than acquaint- 
ing the contractor with the item he is to 
make. In its most complex form it might 
even include the construction of jigs and 
fixtures as well as tools and dies to be 
held on a stand-by basis. 



18 Baker Board Rpt, p. 64. Since the Baker find- 
ings were declared official policy by the President, 
the Baker report takes on more importance than a 
mere recommendation. See also annual report of the 
Assistant Secretary of War, 1936, p. 25, in the Secre- 
tary's Report, and testimony of ASW Woodring at 
Senate Hearings on WD appropriation, March 3, 
!93 6 . P- 3°- 



The Defense Act of ig2o authorized 
the use of educational orders, but the ac- 
tual execution of contracts depended 
upon the willingness of Congress to ap- 
propriate funds. 19 Beginning in 1927 
the War Department asked for funds to 
launch an educational order program. 
Similar measures were introduced re- 
peatedly thereafter, but Congress showed 
little enthusiasm to provide funds for 
"if and when" purposes. 20 Not until the 
mounting threat of the dictatorships in 
Europe and Asia was dangerously far 
advanced did the legislators relent. In 
June of 1938 Congress authorized funds 
for educational orders, but the sum al- 
lowed was only $2,000,000, to be spread 
amongst all the arms and services. As 
the international crisis became more 
acute the War Department returned to 
Congress to present plans for a larger 
educational order program. In 1939, 
with the menace of war too obvious to 
ignore, Congress responded generously, 
but by then it was too late. 21 The care- 
fulful preparations that might have been 
secured at slight expense in the years of 
peace were at that late date to be had, if 
at all, only at tremendous cost. 

Thus, in the matter of educational or- 
ders as in so many other instances, mili- 
tary leaders could retire behind congres- 
sional skirts. Since Congress provided no 
funds, let Congress shoulder the blame. 
War Department officers could rightly 



18 41 Stat 764, sec. 123. 

20 For an example of congressional attitude on edu- 
cational orders in the mid-thirties, see remarks of 
Representative C. C. Bolton of Ohio, Cong Red, 
February 19, 1935, p. 2334. 

21 See summary of WD interest in educational 
orders in the report of the Assistant Secretary of 
War, 1939, pp. 16-17. 



160 



BUYING AIRCRAFT 



claim to have recognized the need for 
educational orders to broaden the base 
of the aircraft industry for an emergency. 
But was this enough? There is a good 
deal of evidence in the record to suggest 
that the officers of the Industrial Plan- 
ning Section at Wright Field did not 
think through the whole problem and see 
its many ramifications. 

Perhaps the decided limitations in the 
imagination of planning officers in the 
Air Corps were spelled out most clearly 
when the Office of the Assistant Secretary 
asked for recommendations on educa- 
tional orders from the Air Corps. When 
Congress seemed about to authorize 
funds, the War Department asked for 
a report as to what jigs, dies, and gauges 
the Air Corps would wish to procure with 
its share of the money. The Air Corps 
replied at length explaining that aircraft 
design was in continual flux, and as a con- 
sequence, prewar investment in produc- 
tion tools was "neither practical nor eco- 
nomical." 22 This was certainly true- 
but it begged the question. 

In refusing to spend money on produc- 
tion tools for airframes as such, the air 
arm was probably pursuing sound policy. 
But this view of the problem utterly 
failed to consider the matter of standard- 
ized components and accessories. Oleo 
struts afford an example. The oleo strut 
is a piston and cylinder assembly used to 
cushion the shock of landing by forcing 
hydraulic fluid through a restricted ori- 
fice. The machining of oleo struts calls 
for skilled craftsmanship, work done to 
close tolerances, and a considerable 



22 R&R, Plans Div to Exec, OCAC, i Nov 37, with 
inclosed draft Memo for OASW, AHO Plans Div 



amount of production experience. In 
the rush to rearm for World War II an 
acute bottleneck developed in the pro- 
duction of these struts. While not an 
entirely standard item, the oleo strut 
did lend itself to the educational order 
program. A little money spent during 
1937 and 1938 on training if not on tool- 
ing up for production might have gone 
far to eliminate the bottleneck that en- 
dangered the air rearmament program 
after the crisis arrived. 

The objection of Air Corps planners 
to the use of educational funds was not 
limited to the idea of prewar production 
tooling alone. They rejected the whole 
concept of educational orders for air arm 
items. One of the officers most actively 
engaged in the work of preparedness 
planning on the eve of World War II 
flatly asserted that the use of educational 
orders was not "practicable" for air arm 
materiel. He argued that the "proprie- 
tory nature" of so many individual items 
of Air Corps equipment that might lend 
themselves to the application of educa- 
tional orders would preclude the use of 
such orders. Manufacturers, he claimed, 
would be unwilling in time of peace to 
turn over drawings, specifications, and 
tools to "outside interests" or potential 
competitors. 23 This may have been true, 
but there is no indication that the Air 
Corps ever undertook an extensive pro- 
gram to persuade the manufacturers of 
critical items to consider the substantial 
advantage they would enjoy if they se- 
lected and "educated" their own second- 
ary sources in peacetime rather than 
waiting for war when arbitrary assign- 



's Exec, Mat Div, to Chief, Mat Div, and CofAC 
in turn, 18 May 37, WFCF 03? Legislation, 1939. 



PLANNING FOR INDUSTRIAL MOBILIZATION 



161 



merits of proprietory rights to alternative 
sources might prove necessary. 

Clearly then, while Air Corps officers 
admitted the assumption that a healthy 
aircraft industry was vital to national 
defense, they failed to explore even the 
immediate environs of their premise, let 
alone its outer orbits. Unfortunately, 
this myopia was not confined to the sin- 
gle premise concerning the need for 
maintaining a healthy industry. A simi- 
lar shortsightedness seems to have been 
prevalent elsewhere too, notably in con- 
nection with the fundamentally impor- 
tant policy of whether or not wartime 
production expansion should be achieved 
by expanding the small extant aircraft 
industry or by converting existing facili- 
ties of others, such as the automotive in- 
dustry. 

Conversion Versus Expansion 

On one point, at least, there was sub- 
stantial agreement by all concerned with 
mobilization planning. If war should 
come, the existing aircraft industry would 
prove entirely inadequate to provide the 
many thousands of aircraft required. 
Additional sources would be necessary, 
whether they were found by expanding 
the existing industry after the arrival of 
an emergency or by converting the pro- 
ductive capacity of manufacturers nor- 
mally outside the aircraft industry. The 
selection of one or the other of these al- 
ternatives necessarily depended in some 
measure upon the definition or concep- 
tion of the problem framed by the staff 
officers responsible for a solution to it. 

There seems to have been a good deal 
of confusion as to the exact nature of the 
job to be done. The plans of the War 



Department for an emergency were for 
the most part conceived in terms of an 
M-day. In his report for 1938 the Secre- 
tary of War specifically warned the na- 
tion against the danger of assuming that 
there would be a cushion of time for 
eleventh-hour preparedness as there had 
been in the years 1914-17. 24 Yet, at the 
same time, air arm officers went on assum- 
ing that the Navy was still the first line 
of defense and the Air Corps would not 
be called upon to provide a substantial 
force for immediate action. Officers of 
the Industrial Planning Section at Wright 
Field, on whom the Assistant Secretary 
placed the burden of decision, saw their 
task primarily as one of speeding the pro- 
duction of aircraft after M-day. 25 

As a consequence of this confusion and 
uncertainty in defining the exact nature 
of the job to be done, the planners had 
a rather hazy base upon which to decide 
whether to convert or to expand. The 
record of experience in World War I, 
which might have been helpful, was not 
readily available. An elaborate history 
of the aircraft production effort in World 
War I never reached publication. One 
copy of the manuscript was destroyed in 
a fire and another was, to all practical 
purposes, lost in the files where it was 
"discovered" during World War II, too 
late to be of real use. For want of spe- 
cific evidence, even the most fundamen- 
tal questions remained unanswered. As 
a result, decisions had to be made on the 
basis of opinions, not facts. 



24 Report of the Secretary of War, ig}8, p. 2. 

25 AAF Hist Study 40, p. 5. For delegation of re- 
sponsibility for decision on conversion or expansion, 
see OASW, Planning Br Cir No. 2, 20 Jul 33, AHO 
Plans Div 145.93-187. 



162 



BUYING AIRCRAFT 



Between 1920 and the beginning of 
World War II, opinion in the Air Corps 
moved to and fro on the question of con- 
version versus expansion. In the twen- 
ties most officers favored conversion. 
Later there was a tendency to favor pro- 
duction by the aircraft industry, leaving 
to outsiders the roles of parts suppliers 
and subcontractors. Finally, in the mid- 
dle thirties responsible officers in the Air 
Corps again swung back to the idea of 
conversion. 26 However, having made 
this decision, the planners promptly ig- 
nored the alternative of expansion. 27 
They made no exploratory studies of the 
problems that might be encountered in 
an expansion of the aircraft industry, ap- 
parently assuming that the decision to 
rely upon conversion would never be 
reversed. 

Once they had decided upon conver- 
sion instead of expansion, the officers of 
the Industrial Planning Section selected 
the automobile industry as the logical 
source of industrial capacity for aircraft 
production in wartime. But their choice 
was valid only insofar as staff officers could 
sell the idea of conversion to the aircraft 
manufacturers as well as the automobile 
firms. Unfortunately, the parties con- 
cerned were not always enthusiastic. One 
of the major automobile manufacturers 
on whom the wartime burden would of 
necessity be thrust was reported to be 
opposed to making even so much as a 
study of the subject until war came. 28 
On the other hand, aircraft builders were 
understandably reluctant to encourage 



26 AAF Hist Study 40, pp. 10-1 1 . 

27 Ibid., p. 13. 

28 Glenn L. Martin to Capt C. H. Welsh, Proc 
Planning Representative, New York City, 12 May 36, 
AHO Plans Div 145.93-182. 



any genuine interest in aircraft construc- 
tion in automotive circles, where such 
interest might ripen into competition. 
A wide gap separated the thinking of the 
car builders and the aircraft manufac- 
turers. 29 

If conversion of the automotive indus- 
try in wartime was to become a reality, 
Air Corps officers somehow had to bring 
together the men who produced aircraft 
and those who turned out automobiles. 
There was much ground to be covered 
in getting the two industries to the point 
where they could exchange ideas, talk 
the same language, and in general appre- 
ciate each other's problems so as to be 
ready for a high order of co-operation 
when war came. 30 Nonetheless, Air 
Corps officers responsible for procure- 
ment planning appear to have taken rela- 
tively few steps in this direction in the 
between-war years. 

In April 1938, when war in Europe 
seemed more than ever imminent, they 
finally took the initiative. The Chief of 
the Air Corps himself asked the Secretary 
of War to approve a plan to use Air Corps 
transportation to fly a number of engi- 
neers from Detroit to the west coast to 
study production problems in the air- 
craft industry. Apart from the cost of 
the flights themselves, the expedition 
would be at the manufacturers' expense. 



29 For evidence on this gap, see, for example, 
Eugene Edward Wilson, Slipstream: The Autobiog- 
raphy of an Aircraftsman (New York: Whittlesey 
House [1950]), page 265, mentioning the "feud" be- 
tween the mass production industry and "the car- 
riage trade." 

30 .\part from getting aircraft and automobile 
makers to understand each other, the Air Corps faced 
the problem of training its own officers to under- 
stand each of them. See, for example, Lecture, 
CofAC, Current Proc and Allied Problems, AIC. 



PLANNING FOR INDUSTRIAL MOBILIZATION 



163 



In the weeks immediately ahead during 
the spring of 1938 the automobile engi- 
neers faced a slack period and could af- 
ford to be away from their regular jobs. 
Unfortunately, for reasons unstated, the 
Secretary rejected the request and sug- 
gested that the matter be raised again "in 
the fall." 31 "In the fall" was too late. 
By then the slack season had passed and 
before another fall rolled around, the air- 
craft manufacturers were far too busy 
with foreign orders to entertain visitors 
from Detroit. The lost opportunity 
could not be recaptured. Once the war 
actually broke in Europe, trained aircraft 
engineers became an even scarcer com- 
modity, and the War Department had to 
pay dearly for their services. 

Much of the record of Air Corps' plan- 
ning to convert the automobile industry 
tells of lost opportunities, though the ac- 
count is not entirely one of frustration. 
There were some substantial efforts made 
by industrial planning officers in the Air 
Corps to work out the detailed steps for 
converting the car industry to aircraft 
production. In some instances the plan- 
ners actually drew up formal "factory 
plans" that helped to bring the problems 
of conversion into clearer focus. A rep- 
resentative factory plan completed in 
June 1938 illustrates the limits that cir- 
cumscribed the thinking of officers en- 
gaged in the work of the Industrial Plan- 
ning Section at Wright Field. 

District officers, using the procedures 
and instructions drafted by IPS, prepared 
a factory plan for the Packard, Graham- 



Paige, and Hudson facilities in Detroit. 32 
The three firms were to be converted to 
production of a twin-engine bomber. 
Although the bomber actually used for 
planning purposes was the Glenn L. Mar- 
tin production model B— 10, which was 
already approaching obsoletion in 1938, 
the planners were less concerned with the 
B-10 as such than with the general prob- 
lem: Can a twin-engine bomber of 12,000 
to 14,000 pounds gross weight be success- 
fully manufactured in the facilities avail- 
able for conversion? 

The Air Corps planners had to break 
the aircraft into its components to deter- 
mine whether or not the available labor 
skills, engineering talent, machine tools, 
floor space, and the like were available 
in the facilities selected for conversion. 
At this point the planning officers were 
plunged into difficulties. They found 
the Detroit manufacturers utterly inex- 
perienced in appraising the problems to 
be encountered in aircraft production 
through a study of drawings and samples. 
This was scarcely surprising, in view of 
the differences in the items produced by 
the two industries, but instead of train- 
ing the manufacturers by thrusting upon 
them the task of making a production 
analysis, thus helping them to learn by 
experience, Air Corps officers used a study 
prepared by Glenn L. Martin. The Air 
Corps lacked funds and the automobile 
manufacturers were unwilling to spend 
their own for a fresh approach, so the 
planners did the next best thing and bor- 
rowed a production study. This was ex- 



31 CofAC to SW, 26 Apr 38, copy with marginal 
notes on reply by Gen Westover, AHO Plans Div 
145.93-182. 



32 The following paragraphs are based upon the 
factory plan of 25 June 1938, copy in AMC Histor- 
ical Office files. 



164 



BUYING AIRCRAFT 



pedient, but it missed the whole point 
of the exercise. 

By imposing upon the automobile 
manufacturers a production analysis 
based on Martin's shop practices, the 
planners tended to force the patterns and 
techniques of the job-shop aircraft indus- 
try upon the mass-production automotive 
industry. And at the same time, the De- 
troit manufacturers did not get the value 
of the experience they would have ac- 
quired had they actually come to grips 
with the problem of making a production 
analysis of a twin-engine bomber. The 
stock response industrial planning officers 
subsequently gave to this criticism was 
that there were no funds available and 
planners had to rely entirely upon the 
willing co-operation of the manufactur- 
ers. This was certainly true, but since 
it was and the results were unsatisfactory, 
the officers of the Industrial Planning 
Section were under a clear obligation to 
push aggressively for educational funds. 
Instead, they rejected invitations from 
the Assistant Secretary of War to lay plans 
for spending educational order money 
when it became available. 33 

If one accepts the limits imposed upon 
procurement planning and advance train- 
ing by lack of funds as unavoidable, there 
still remain grounds for criticizing the 
vision of those who drew up the factory 
plans. The B-io bomber plan, for ex- 
ample, reflects a touching faith in the 
ability of the automobile manufacturers 
because of their "enormous capacity." 34 



33 R&R, Plans Div to Exec, OCAC, 1 Nov 37, with 
enclosed draft Memo for OASW, AHO Plans Div 
145.91-182. See also, Interview with Detroit Dist 
Hist Office, 1945, same file. 

** Factory Plan of 25 Jun 38, copy in AMC Hist 
Office files. 



While it was true that the facilities being 
surveyed did have "enormous capacity/' 
the phrase was meaningless. The factory 
plan itself failed to provide a detailed list 
of the machine tools available, nor did it 
indicate whether the available tools could 
work to the tolerances required in air- 
craft construction. In short, the plan 
retired into vague generalities at exactly 
the point where precise information 
would be most useful in an emergency. 

In at least one respect the B-10 factory 
plan probably justified itself. Procure- 
ment planning officers discovered that 
despite the "enormous capacity" of Pack- 
ard, Graham-Paige, and Hudson with a 
combined total of over 7,750,000 square 
feet of floor space, an additional 500,000 
square feet of new construction would 
be necessary. Assembly areas would have 
to be provided near the fly-away point 
with bay areas of sufficient dimension to 
accommodate the wings of a bomber. 
Even in the case of the B-10 with its mod- 
est wing span of 70 feet 6 inches, the 
available bay areas were inadequate. The 
B-18, a production model twin-engine 
bomber in 1938, had a wing span of 89 
feet, 6 inches, and the trend in bombers 
was toward even greater spans. 

Thus, in practice, the Air Corps' policy 
of conversion could not be taken at face 
value. Conversion might of necessity also 
involve a certain amount of expansion, 
as the B-10 factory plan clearly revealed. 
But the IPS officers failed to act upon 
this consideration. What is more, the 
record suggests that they were not very 
resourceful in making use of the experi- 
ence on expansion already available from 
British precedents. 

In the mid-thirties the British Govern- 
ment launched an extensive preparedness 



PLANNING FOR INDUSTRIAL MOBILIZATION 



165 



program of which one feature was the so- 
called shadow factory plan. Among these 
shadow factories were airframe and en- 
gine assembly plants erected at govern- 
ment expense to be operated by mana- 
gerial and labor skills outside the regular 
aircraft industry. One such was the air- 
frame assembly plant erected near the 
famous Austin factory near Birmingham. 
The aircraft to be produced was designed 
by the Fairey aircraft firm, but the labor 
and management in an emergency were 
to be recruited from the Austin force 
while the nearby Austin plant itself 
would manufacture parts to supply the 
shadow assembly plant. 35 

The military attaches of the United 
States stationed in London reported on 
the shadow factory program of the Air 
Ministry at great length. 36 The program 
as a whole embraced six major and twelve 
minor facilities. By the end of 1937 it 
involved an investment of some £7,500,- 
000 ($37,500,000)." Out of this expen- 
diture came a wealth of experience con- 
cerning facility expansion, contract forms, 
techniques of compensation, techniques 
for perfecting liaison between designers 
and producers, as well as much other in- 
formation. 

Officers of the Planning Branch in the 
Office of the Assistant Secretary of War 
were aware of the opportunities offered 
by British activity in the field of procure- 
ment planning. They sought and re- 



35 Military Attache, London, Rpt 39*81, 4 Mar 38, 
AMC CADO F35/332. 

30 See, for example, Military Attache, London, Rpt 
38310, 19 Oct 36, a 55-page survey of the whole 
British rearmament program, and subsequent re- 
ports, passim, in CADO C2 1/4/6 et al. 

37 Military Attache Rpt 39047, 5 Nov 37, AHO 
Plans Div 145.93-182. 



ceived permission for representatives of 
the War Department to visit some of the 
British shadow establishments. More- 
over, they invited the Industrial Plan- 
ning Section at Wright Field, amongst 
others, to submit a list of questions to 
guide the representatives in their deal- 
ings with the British Air Ministry. 88 This 
was in December 1936. The officer who 
was then Chief of the Industrial Planning 
Section responded with unusual enthu- 
siasm. 39 Not content merely to compile 
questions for others, he asked for author- 
ity to send some representatives from his 
organization at Wright Field. 40 Unfor- 
tunately, the request was still shunting 
to and fro in the Air Corps paper mill 
in the summer of ig38. 41 Once again a 
potentially fruitful idea lost its point by 
being delayed and deferred until too late. 

Officers of the Industrial Planning Sec- 
tion could have profited from British ex- 
perience with shadow factories, even with- 
out sending observers abroad. Military 
attaches recorded much of value about 
the shadow factory program. Some of 
their reports gave references to published 
articles on the program. Both the attache 
reports and the published matter were 
available in the Technical Data Library 
at Wright Field. Once again, however, 
the officers of the Industrial Planning 
Section appear to have discovered them 



38 Memo, Dir Planning Br, OASW, for Cof AC, 1 1 
Dec 36, AFCF 360.02A Foreign Aviation. 

39 See reply to questionnaire by Mat Div, 24 Dec 
36, AFCF 360.02A Foreign Aviation. 

40 Chief, Industrial Planning Sec, to Cof AC, 4 Jan 
38, AHO Plans Div 145.93-182. Note the time lag 
between the questionnaire and the request. 

41 1st Ind, Mat Div to CofAC, 28 Jun 38, basic 
unknown, WFCF 381.4 Shadow Factories 1940; Chief, 
Plans Div, to CofAC, 10 Jun 38, AHO Plans Div 
!45-9S- 182 - 



166 



BUYING AIRCRAFT 



too late. When inspected after the war, 
the library charge-out cards indicate that 
they had been used only once. The only 
name on virtually all of the cards was 
that of the officer in charge of mobiliza- 
tion planning. The date on each was 
November 1938, a date after the Presi- 
dent had touched off the program to ex- 
pand the air arm. In sum, then, although 
Air Corps officers expected to rely upon 
conversion of automotive facilities to pro- 
duce aircraft in adequate quantity during 
an emergency, their exploratory studies 
of conversion were limited both in scope 
and in imagination. 

The Chief of the Air Corps was by no 
means unaware of the many weaknesses 
in air arm mobilization planning. In 
1938, on the eve of the expansion pro- 
gram that ultimately was to transform the 
Air Corps into a mighty force, he called 
a conference of representative aircraft 
manufacturers. He hoped to secure 
their co-operation in the mobilization 
that loomed ahead. In his introductory 
remarks he suggested some of the ques- 
tions that would have to be asked and 
answered if the coming mobilization was 
to be rapid, orderly, and economical. 
Would aircraft builders allow manufac- 
turers outside the industry to reproduce 
their designs? On what basis? Should 
converted automobile manufacturers 
draw parts and components from their 
own regular suppliers or should the air 
arm undertake a vast program to pro- 
vide government-furnished equipment? 
Should the government provide assem- 
bly facilities? If so, should the govern- 
ment operate the plants? Should the au- 
tomobile manufacturers or the old-line 
aircraft builders assume responsibility? 
Should the government immediately erect 



shadow plants or should industry take the 
initiative? 42 These were all intelligent 
questions. They were the right ques- 
tions to pose because they reflected prob- 
lems yet unanswered. They had to be 
answered before the Air Corps could ex- 
pect production to the limit. But the 
formulation of such questions in Septem- 
ber 1938 was decidedly late in the game. 
If mobilization planning is to be truly 
helpful it has to be done in the years of 
peace to prevent the chaos of last-minute 
improvisation. 

Air Corps Planning in Perspective 

A Signal Corps officer once remarked 
that prewar mobilization plans were 
"in-the-safe-mirages," an apt description 
when applied to Air Corps planning ef- 
forts. The annual report of the Materiel 
Division at Wright Field stated in August 
1938 that air arm mobilization planning 
had become more "practical" in recent 
months, yet at that very time much of 
the effort expended by IPS officers still 
went into the task of converting the 1933 
mobilization plan into the Protective 
Mobilization Plan. 43 

To say the very least, many features 
of the air arm mobilization plan were 
unrealistic. The officers who worked out 
the details often seemed to have lost touch 
with the realities of war during the long 
years of peace. Some, for example, be- 
lieved that the way to achieve increased 
production was to freeze design. 44 Such 

42 Comments by Gen Westover, cited n. 10, above. 

43 Draft of annual rpt, Mat Div, 27 Aug 38, WFCF 
321.9 Annual Rpt. 

44 Ltr, Plans Sec to IPS, 7 Mar 38, AHO Plans Div 
145.93-182. This entire letter reflects the lack of 
realism that colored much procurement planning 
work. 



PLANNING FOR INDUSTRIAL MOBILIZATION 



167 



views ignored the bitter experience of 
World War I: to gear mobilization plans 
to a concept of rigidly frozen designs was 
to invite disaster and to ignore the alter- 
native. The alternative, of course, was 
to establish a system that would intro- 
duce modifications into the production 
line without retarding output. Such in- 
line modifications are at best difficult to 
administer, but planning officers cer- 
tainly did nothing to improve the situa- 
tion by ignoring the matter entirely dur- 
ing the prewar years. 

What the planners needed most, it 
would appear, was the stimulus to self- 
criticism. They needed some means by 
which they could subject their plans, 
their work, even their thinking, to ob- 
jective, disinterested criticism or evalua- 
tion. Most military organizations are 
probably deficient in this respect in peace- 
time, but the theoretical character of their 
work probably made the mobilization 
planners exceptionally vulnerable. Some 
officers had recognized this deficiency, 
for from time to time those in charge 
conducted command post exercises and 
war games to test the efficacy of the plan- 
ning being done. 48 This was a move in 
the right direction, no doubt, but the 
war games were largely routine. They 
gave an opportunity to check the ade- 
quacy of procedures and practices already 
established but did little to question the 
soundness of underlying assumptions. 

Only a few war games were conducted. 
At best they seem to have been of limited 
use. Perhaps the best indication of their 
unimportance and occasional character is 



45 See Memo, Chief, Allocations Div, OASW, for 
Plans Div, OCAC, 21 Jul 38, AHO Plans Div 145.93- 
182. See also, AFCF 353.6 passim. 



to be seen from the manner in which 
many of the records of these exercises 
were filed: Material on "War games" was 
placed under "Games," along with "Ath- 
letics" and "Physical training" in the 
central files. 

In general, few attempts were made at 
self-criticism although on occasion, of 
course, there were individual officers who 
did question the premises underlying mo- 
bilization planning. After one meeting 
of procurement planners at Air Corps 
headquarters, an officer representing one 
of the procurement districts wrote a scath- 
ing criticism of the whole conference and 
the ideas presented there. With more 
courage than tact he contrasted the sub- 
ject of the conference as advertised in 
the agenda with the subjects actually dis- 
cussed. Then with unusual prescience 
he launched into a number of specific 
criticisms of Air Corps planning that 
events in the following months were to 
prove only too valid. He scored particu- 
larly the absence of adequate planning 
data and the failure to use current pro- 
curement as a point of departure. 46 Un- 
fortunately, the criticism was not wel- 
comed and was not weighed for what it 
might be worth. Somewhat later a com- 
plaint to headquarters from Wright Field 
described this particular critic as "over- 
zealous" in "trying to make a worthwhile 
showing" and as one "impatient" with 



46 Mimeograph MS, Comments on New York Dis- 
trict on Resume of Procurement Planning Confer- 
ence Held in OCAC, 6 Sep 38; and Proc Planning 
Representative, New York City, to CofAC, 25 Oct 
38. Both in AHO 145.92-182. For an interesting 
postwar opinion tending to confirm these criticisms, 
see transcript of testimony by Maj Gen O. P. Echols, 
29 Sep 47, before President's Air Policy Comm, Na- 
tional Archives, Reds Group 220, box 6, file 37-id. 



168 



BUYING AIRCRAFT 



the overworked IPS staff. 47 Officers en- 
gaged in the work of industrial planning 
evinced little desire to submit their pre- 
suppositions and their work to criticism, 
even to the criticism of officers within the 
organization. 

From the perspective of the postwar 
era, it is possible to see the problem of 
Air Corps industrial mobilization plan- 
ning with some clarity. By and large the 
central difficulty seems to have been the 
tendency of the planners to emphasize 
organization rather than operations, form 
rather than function. The planners con- 
cocted highly complex mobilization plans 
but failed to come to grips with the heart 
of the matter, the assumptions underly- 



47 Exec, Mat Div, to Col A. H. Hobley, 38 Jan 39, 
AFCF 004.4 Firms and Factories. 



ing their plans. They put more empha- 
sis upon the office than upon the idea. 
Yet, for all the stress upon the details of 
planning to the neglect of principle, in 
actual point of fact the Industrial Plan- 
ning Section at Wright Field did not even 
do a very good job of housekeeping. 48 



48 Perhaps the most dramatic evidence of the air 
arm's ineffective planning for war is to be seen in 
the memo drafted by the Planning Branch, OASW, 
for the Assistant Secretary to send to the President 
in reply to his rearmament proposals, 10 November 
1938. The productive capacity of the nation's air- 
craft industry was, he confessed, "unknown." (AHO 
Plans Div 145.93-182) If the judgments rendered 
in this critique seem harsh on the planners, they are 
no harsher than the criticisms rendered after World 
War II by the industrial planning officers who sought 
to profit from their earlier mistakes. See, for ex- 
ample, Pre-World War II Industrial Preparedness, 
Air Coordinating Com Project 5, prepared by In- 
dustrial Mobilization Planning Div, AMC, 10 Mar 
48, especially sees. E, F, and G, WFHO. 



CHAPTER VIII 

The Tide Turns 



The President Proposes; 
Congress Disposes 

During the summer of 1938 President 
Roosevelt reached the conclusion that 
drastic steps would have to be taken to 
rearm the nation in the face of menacing 
dictatorships in Europe and Asia. A 
number of people contributed to the for- 
mulation of this crucial decision. No 
doubt Hitler's speech at Nuremberg, 
which the President heard on the radio 
a scant fortnight before the betrayal of 
Czechoslovakia in 1938, helped to pre- 
cipitate the decision to rearm. 1 But there 
were others, too, who helped to condi- 
tion the President's mind and to prepare 
him for a new tack his administration was 
about to follow. Ambassador Hugh R. 
Wilson sent frightening reports to the 
President from Berlin. Businessmen re- 
turning from visits to German factories 
communicated their alarm indirectly 
through officials in the War Department. 2 



1 Robert E. Sherwood, Roosevelt and Hopkins: 
An Intimate History (New York: Harper and 
Brothers, 1950) pp. 99-100. 

2 Memo, Exec, OASW, for ASW, 33 Jun 38, SW 
files, item 568. See also, Wilson to President, 1 1 Jul 
'38, SW files, item 608. The Ambassador was in- 
fluenced not alone by the reports of attaches and 
other such officials but also by conversations with at 
least two aircraft manufacturers from the United 
States who, as trained observers, grasped the implica- 
tions of what they saw in the German factories they 
visited. In addition to reports of Glenn L. Martin 



When at last Ambassador William C. 
Bullitt returned from France with evi- 
dence confirming these reports, the Pres- 
ident made up his mind. 3 There was no 
alternative: the United States must re- 
arm, whatever the cost, and air power 
must play a leading role in national de- 
fense. 

White House Meeting 

On 14 November 1938 the President 
summoned a number of his political and 
military advisors to the White House. 
He did not ask for advice, he laid his poli- 
cies on the line. The Army air arm, he 
declared, must be built into a heavy strik- 
ing force. After noting the sorry posi- 
tion to which the United States had fallen 
in contrast to recent advances in German 
air power, the President asserted that the 
Air Corps alone required a strength of 
20,000 aircraft backed by an annual pro- 
ductive capacity of 24,000 units. Unfor- 



and James H, Kindelberger mentioned by Wilson, 
see Memo, E. E. Aldrin for CofAC, 17 Oct 38, item 
710. An earlier report, by Mr. T. P. Wright of 
Curtiss-Wright, indicated that by 1936 German air- 
craft production was already three times that of the 
United States and Britain combined. See Wright 
to Brig Gen William H. Harris, Chief of Military 
History, 13 Oct 61, OCMH. 

3 Mark Skinner Watson, Chief of Staff: Prewar 
Plans and Preparations, UNITED STATES ARMY 
IN WORLD WAR II (Washington, 1950), pp. 131- 
8a- 



170 



BUYING AIRCRAFT 



tunately, the President went on to point 
out, if he were to ask for any such num- 
ber, Congress would vote him half as 
much. Far better, he felt, to ask for 
10,000 to begin with and have some as- 
surance of congressional support. The 
10,000 aircraft, the President explained, 
could be procured over a two-year period. 
One-fourth of the total could be training 
craft; the remainder, all tactical or com- 
bat types, would be divided equally; half 
in active use, half in reserve. 4 

The White House meeting marked a 
turning point in the history of national 
defense. Military advisors who had been 
urging increases in strength upon the 
President for months, if not for years, 
now found themselves directed to plan 
an expansion of air power considerably 
larger than any for which they had ever 
dreamed of asking. Where, then, did the 
President get his figures? 

Why 20,000? Did the President sug- 
gest this number initially to the generals 
or had the generals previously suggested 
the figure to the President? War Depart- 
ment officials had made numerous pro- 
posals during the summer of 1938 to in- 
crease Air Corps strength above the 2,320- 
unit limit then prevailing. Many pro- 
grams were discussed, but none of those 
seriously considered seems to have ex- 
ceeded a ceiling of 7,000 aircraft before 
the President set 10,000 as a goal. 5 The 
Chief of the Air Corps, Maj. Gen. Henry 



* Ibid., ch. V. 

5 General Arnold mentioned the 7,000 figure; Sec- 
retary Woodring said he had never heard of any 
figure above 10,000 mentioned in the War Depart- 
ment before the President's conference. See House 
Hearings on WD supplementary appropriation for 
1940, May 19, 1939, p. 54, and June 5, 1939, pp. 275- 
79- 



H. Arnold, undoubtedly did give the 
President some figures through Harry 
Hopkins, as he states in his memoirs, but 
his own subsequent testimony before a 
congressional committee indicates that it 
was the President rather than the gener- 
als who exerted the initiative. 6 More- 
over, none of the programs mentioned 
in the War Department even remotely 
touched the figures initially considered 
by the President. As it now appears, the 
President privately decided that 30,000 
not 2 0,000 aircraft were needed to face 
the German menace, but the cost of 
30,000 aircraft induced him to set his 
"requirement" in the White House con- 
ference at 20,000. And even this figure 
he felt compelled to halve on grounds of 
political necessity. 7 

The President' s Message to Congress 

When the President sent a special mes- 
sage on national defense to Congress on 
12 January 1939, he was fulfilling a po- 
litical role as well as observing a con- 
stitutional and ceremonial rite. The 
President felt that a larger air force was 
necessary, but he also knew what such a 
force would cost. Rumors that the Presi- 
dent intended to ask for 10,000 airplanes 
when Congress assembled were not denied 
at the White House. For six weeks be- 
fore the opening of Congress newspaper 
writers speculated on the number of air- 
craft the President would seek. Instead 
of 10,000 or 8,000, or any of the other 



a Arnold, Global Mission, pp, 177-79; Arnold's 
testimony, House Hearings on WD appropriation 
for 1940, January 30, 1939, p. 296. 

7 The President's original aim of 30,000 aircraft is 
mentioned in Watson notes on interview with Maj 
Gen J. H. Burns (Ret), 7 Feb 47, OCMH. 



THE TIDE TURNS 



171 



figures guessed in the press, the Chief 
Executive suggested that funds should be 
provided for an increase of not less than 
3,000 aircraft. 8 Congress gave an almost 
audible sigh as most congressmen ad- 
mitted a "feeling of relief" that the Presi- 
dent had been so "moderate" in his de- 
mands. 8 It was the essence of the Chief 
Executive's political skill to agree that 
half a loaf was better than none. Clearly, 
the President had trimmed his request 
to make it politically acceptable. Were 
his generals doing any differently when 
they in their turn went to Congress for 
funds? 

The Air Corps Budget: 
Fiscal Year 1940 

By time-honored custom, appropria- 
tion committeemen opened hearings on 
the executive budget in the first month 
of the new year. Representatives of the 
War Department, including the Chief of 
Staff and the Chief of the Air Corps, were 
summoned to the Hill to defend the esti- 
mates they had prepared long since for 
approval by the Bureau of the Budget. 
Toward the end of January 1939, when 
General Arnold took his turn before the 
committee, his requests were something 
of an anticlimax. If the President had 
surprised Congress by asking for approxi- 
mately 3,000 rather than the rumored 
10,000 aircraft, General Arnold produced 
yet another surprise. He asked less money 
for new equipment than had been sought 

8 Cong Red, January is, 1939, p. 2i8ff. 

9 Aviation (February, 1939), p. 80. See also, com- 
ments in New York Times quoted in CWO Merton 
England and Dr. Chauncey Sanders, Legislation Re- 
lating to the Army Air Forces Training Program, 
1939-1945, AAF Hist Studies, 7, revised 1946, copy in 
OCMH, p. 4. 



in the previous year, a figure sufficient to 
procure not more than 219 new aircraft. 
This minute request, he implied, was ne- 
cessitated by the approach toward the 
authorized ceiling of 2.320. 10 

Thus the Air Corps was placed in the 
absurd position of curbing its request to 
stay within the legal limit even though 
the President had already informed the 
War Department of his desire for 20,000 
aircraft and Congress had received his 
message asking for funds to provide at 
least 3,000. The congressmen might 
have been willing to accept this absurd- 
ity, knowing as they did that the budget 
was formulated nearly a year before, but 
there was an obvious discrepancy in the 
testimony given before them. While the 
Chief of the Air Corps solemnly declared 
that the Air Corps could not ask for more 
aircraft because of the 2,320 ceiling on 
authorized strength, a few days earlier 
the Chief of Staff, General Malin Craig, 
had informed the committee that the au- 
thorized ceiling was not 2,320 but 4,12c 11 

When the Chief of Staff had approved 
the War Department's estimates several 
months earlier, he had certainly seemed 
to believe 2,320 was the authorized ceil- 
ing on air strength. Moreover, his annual 
report, which by coincidence reached the 
newspapers on 14 November, the day of 
the White House meeting, had warned 
against the dangers of favoring one arm, 
such as the Air Corps, at the expense of 
the others. 12 Yet barely a month later he 
was claiming that 4, 120 rather than 2,320 



10 House Hearings on WD appropriation for 1940, 
January 30, 1939, pp. 11, 283. The aig aircraft in- 
cluded 178 for the Regular Army and 41 for the 
Organized Reserves and National Guard. 

11 Ibid., pp. 1 1, 294. 

la New York Times, November 14, 1938. 



172 



BUYING AIRCRAFT 



was the legal ceiling on air power. His 
explanation was simple. The Air Corps 
Act of 1926 authorized 1,800 aircraft. 
The Act of 24 June 1936 authorized 
2,320. If one construed the measures as 
supplementary, then the number of air- 
craft authorized amounted to the sum of 
the two, or 4,120. 

The discrepancy between the testi- 
mony of the Chief of Staff and that of 
the Chief of the Air Corps led to an ob- 
vious question in Congress. 13 If 4,120 
was the authorized ceiling, why then did 
the Air Corps come to the Hill asking 
for only enough new aircraft to reach 
2,320, even though the President had 
urged Congress to provide for far more? 
Air Corps officers had not mistaken the 
meaning of statutes all along. On the 
contrary, there is ample evidence to show 
that they had tried to construe 4,120 as 
the ceiling but had met with resistance 
from within the War Department. 14 
There it had been held that such an in- 
crease in air strength was "in excess of re- 
quirements" and would require a "huge 
annual increase" in the estimates pre- 
sented to Congress in future years merely 
to maintain the enlarged air arm. 15 

Thus, when the Chief of the Air Corps 
testified in behalf of estimates based on 
a 2,320 ceiling, he was defending a figure 



13 See exchange in Senate between Senator Shep- 
pard and Senator Alben W. Barkley, Cong Red, 
February 27, 1939, pp. 1915-16. 

"Copy, Memo, G-4 tor CofS, 17 Jun 38, JAG 
(Army) Gen Reds Sec 452.1 Aircraft; Memo, OASW 
for G-4, 29 Jul 38, SW files, AC, item 963; Memo, 
OCAC Fiscal Officer to Gen Arnold, ag Nov 38, AFCF 
360.01 A. 

15 Unsigned Memo, undated but sometime follow- 
ing 16 October ig38, staff study offering arguments 
against 4,120 as a ceiling figure, WPD-OPD 3807- 
2 8 A. 



that he had been constrained to accept 
by higher authority. When the Chief of 
Staff, who had long been unwilling to 
give the air arm an abnormal share of 
the War Department budget, testified in 
January 1939 that the legal ceiling on air- 
craft was 4,120, he spoke as a very recent 
convert. In fact, his conversion to a be- 
lief in air power seems to have dated from 
the White House meeting in November. 18 
In sum, the Air Corps estimate for fis- 
cal year 1940 suggests that budgetary 
considerations determined the official 
statement of requirements presented to 
Congress by General Arnold far more 
than did tactical or strategic considera- 
tions. Which is to say, the generals 
seemed to be doing the very thing the 
President was condemned for doing: de- 
fining defense requirements not in terms 
of strategic necessity but upon a basis of 
what was politically feasible. 

Executive Leadership 

Bewildered congressmen might well 
have wondered what to believe when 
asked to vote on vital questions of na- 
tional defense. The Air Corps asked for 
funds to reach a ceiling of 2,320 airplanes, 
and then in the very midst of the con- 
gressional hearings on this estimate the 
Chief of Staff declared that the legal ceil- 
ing was really 4,120, or nearly twice as 
many aircraft. On the other hand, the 
President let his intimate associates talk 
for nearly a month about 8,000 or 1 0,000 
airplanes then, when Congress opened, 
asked for only 3,000. 

Seen in retrospect, the President's tend- 



M Watson, notes on interv with Gen Burns, 



THE TIDE TURNS 



173 



ency to blow first hot and then cold, now 
10,000, now 3,000, was perhaps deliber- 
ate and not haphazard planning. The 
President's 10,000-airplane goal may have 
served as a most useful trial balloon. 
Carefully "leaked" to the press, it gave 
the President an opportunity to provoke 
discussion on the point, an opportunity 
to accustom the public in general and 
congressmen in particular to the immense 
increases in air power that he sought. 17 
Once the critics had fired all their ammu- 
nition at this trial balloon, the President 
could then ask for somewhat less and ap- 
pear moderate in so doing. But there 
appears to have been a second purpose 
in the President's strategy. Besides con- 
vincing the public of the need for more 
air power, the President may have been 
working to convert individuals within 
the War Department as well. The long 
feud between the air and ground compo- 
nents had conditioned air arm officers to 
minimize their requests for funds and air- 
craft. 18 Rather than stir up the old fight 
annually, they seemed inclined to ask for 
less, to accept 2,320 as a ceiling rather 
than fight for 4,120. Thus the Presi- 
dent's bold suggestion of 10,000 served 
as a dramatic catalyst that jarred Air 



11 The strategy of the President's leaks to the press 
may be followed clearly in the New York Times, viz., 
October 14, 1938, p. 13; October 15, p. 1; Novem- 
ber 6, p. 1; November 13, sec. X, p. 8; November 19, 
p. 4; November 24, p. 22; December 5, p. 16; Decem- 
ber 27, p. 3. 

18 Long after the President indicated his intention, 
in October 1938, of encouraging big increases in na- 
tional defense, the War Department continued to 
inspire stories calling for increases in air strength 
up to 3,000 or 4,000. Even the Chief o£ the Air 
Corps hinted to reporters that an increase of 2,000 
more aircraft would be the limit; see New York 
Times, October 16, p. 31; October 23, p. 8; October 
23, sec. X, p. 5. 



Corps officers into thinking and planning 
in large numbers. 

In the light of these developments, the 
requests of the Chief Executive appear to 
have been purposeful elements of politi- 
cal tactics. On the other hand, the Air 
Corps' request for funds to reach a ceil- 
ing of 2,320 rather than the 4,120 per- 
mitted by law was equally understand- 
able. Neither folly nor blindness, this 
request merely reflected the obvious con- 
sequences of inflexibility in the legally 
prescribed system for budgetary plan- 
ning. As any experienced congressman 
would know, the estimates presented by 
the Air Corps stemmed from plans initi- 
ated anywhere from eighteen months to 
two years earlier. If the Air Corps was 
to be held responsible for a blunder in 
asking for 2,320 when the real ceiling was 
4,120, the responsible officers might with 
justice point out that the estimates pre- 
sented were those approved by the Bu- 
reau of the Budget and the President 
himself. Moreover, the terms of the 192 1 
Budget and Accounting Act required the 
officers who presented an estimate to de- 
fend it loyally and take no initiative in 
asking for more. 19 

Between the time when the Bureau of 
the Budget originally approved the War 
Department estimates for fiscal year 1940 
and the time when General Arnold went 
to the Hill to defend the air arm estimate, 
the diplomatic and strategic setting had 
changed most drastically. The President 
had changed his mind regarding expend- 
itures for defense. So had the Chief of 
Staff. But the Budget and Accounting 
Act of 1921 made no provision for such 
changes. Designed to provide for or- 



19 42 Stat 20, sec. 206. See above, Ipp. 60-61. 



174 



BUYING AIRCRAFT 



derly treatment in fiscal matters, the act 
proved too rigid in a dynamic political 
situation. The Chief of the Air Corps 
was thrust into the uncomfortable posi- 
tion of defending an estimate based upon 
a 2,320-aircraft ceiling in January 1939 
even though the President, in November 
1938, had already told him to work for 
10,000. 

The Congress Disposes 

Early in February 1939 the chairman 
of the House Military Affairs Committee 
introduced a bill calling for an increase 
in air power to an authorized ceiling of 
6,000 aircraft. The 6,000 figure was 
neither the 10,000 suggested by the Pres- 
ident, in November, the 3,000 he asked 
for in January, nor a plausible compro- 
mise suggested in Congress to adjust the 
two extremes. As a matter of fact, the 
proposed measure was a departmental 
bill. It was more or less drafted by offi- 
cials in the War Department and pre- 
sented to Congress as a desired objective. 20 

The transitions from 10,000 to 3,000 
to 6,000 airplanes were the essence of the 
President's political art. His original in- 
tention in November had been to secure 
10,000 aircraft for the Air Corps in two 
years, with three-quarters of the force to 
be combat types. During the latter half 
of November and throughout December 
the President read the omens as they ap- 
peared. He encountered considerable 
opposition from within the Army in 
favor of a balanced force rather than ab- 
normal expenditures on air power alone. 
At the same time, when the President 
learned the probable cost of 10,000 air- 

20 Cong Red, February 14, 1939, p. 1389. 



planes as estimated by air arm officers, 
he began to doubt whether it would be 
possible to secure the necessary funds 
from a reluctant Congress. Once again 
he trimmed sail to meet the prevailing 
winds and agreed to accept a program of 
5,500 aircraft with provision for a ceiling 
at 6,000, which allowed a margin for 
units on order. 21 Since there were on 
hand at the end of 1938 some 1,797 a ^ r * 
craft, of which 351 would soon be obso- 
lete, the net available strength was 1 ,446. 
By adding to this the aircraft on order 
or about to be ordered from current ap- 
propriations there was a total of 2,464, 
which subtracted from 5,500 left 3,032. 22 
So the President had asked Congress for 
about 3,000 airplanes. 

The President's maneuver was exceed- 
ingly adroit, as events proved. His re- 
quest for 3,000 won him support from 
the very people who had been most 
alarmed by the rumors of 10,000 or more 
aircraft emanating from "usually reliable 
sources" and undenied at the White 
House. 23 Yet even as his request for 
3,000 was made, Air Corps officers were 
readying a bill asking for a ceiling of 
6,000. This, of course, would not bear 
the White House label and in any event 
by the time it appeared the President 
would already have garnered the divi- 
dend of his apparent moderation. 



21 Watson, Chief of Staff: Prewar Plans and Prep- 
arations, pp. 139-43. 

23 Figures presented by ACofAC in committee 
Hearings quoted in Cong Red, February 14, 1939, 
P- l 377- 

23 See, for example, editorial in Aviation that 
praised the President's message as "very reasonable" 
and promised to back the administration to the hilt 
even though previously dubious about the big pro- 
grams mentioned in the press. Aviation (February, 
!939). P- 81. 



THE TIDE TURNS 



175 



From Bill to Statute 

Seen in contrast to the rising might 
of the Luftwaffe, the President's request 
for 3,000 aircraft came as a surprise. It 
tended to disarm the opposition. To ask 
for less would clearly be criminal negli- 
gence. As soon as the debate on the new 
aircraft ceiling began on the floor, the 
Republicans announced that an opposi- 
tion caucus had agreed to support the 
administration measure in the interests 
of national defense. 24 But even with 
victory for the measure assured in prin- 
ciple, it was not carried without a fight. 
Isolationists and members of the economy 
bloc made a determined effort to scuttle 
the bill with amendments that would 
have spread the procurement program 
over a greater number of years. 25 De- 
spite the determination of the bill's op- 
ponents, both Houses passed the measure. 
Adjustments in conference consumed the 
inevitable number of weeks, so it was not 
until April 1939 that the 6,000 ceiling 
became law and the Air Corps could ac- 
tually proceed with the 5,500 program. 26 

The First Expansion Program 

The White House meeting of 14 No- 
vember 1938 touched off a furor of plan- 
ning activity unlike anything seen in the 
War Department since the days of World 
War I. And in the midst of this furious 
bustle was the Assistant Secretary of War, 
Louis A. Johnson. 



24 Cong Red, February 14, 1939, pp. 1375-76, de- 
bate on H.R. 3791. 

25 Ibid., pp. 1378-87. See also, House Rpt 32, Feb- 
ruary 8, 1939; Senate Rpt, February a 2, 1939; and. 
Doc 38, March 16, 1939. 

28 53 Stat 555, April 3, 1939. 



The Role of Louis Johnson 

On the day following the White House 
meeting, Louis Johnson, as Acting Secre- 
tary of War, sent a directive to the Chief 
of Staff mapping out the steps to be fol- 
lowed in carrying out the President's or- 
ders. Taking his cue from the President, 
he asked for detailed plans to provide for 
an Air Corps of 10,000 aircraft in two 
years, half of which were to be in a re- 
serve status without operating personnel 
and base facilities. To provide the pro- 
ductive capacity asked by the President, 
the Assistant Secretary directed the Chief 
of Staff to draw up budgetary plans for 
the construction of seven government- 
owned aircraft factories, each with an 
average capacity of 1,200 units per year. 
This capacity, in conjunction with the 
anticipated expansion of the existing in- 
dustry would, he hoped, be capable of 
meeting the total production potential 
desired at the White House. 27 

Louis Johnson, with restless drive and 
tireless energy, built fires on every hand 
to break through the administrative rou- 
tines with which the War Department 
had become encumbered during the long 
years of peace. Though Congress was 
slow in appropriating the funds neces- 
sary to start the aircraft program on its 
way, Johnson would not permit this to 
become an excuse for delay. He ordered 
all the necessary aircraft contracts to be 
prepared and ready for formal approval 
the moment the President signed the ap- 
propriation bill. 28 Again and again when 
opportunity offered, the Assistant Secre- 

27 Memo, Actg SW for CofS, 15 Nov 38, SW files, 
AC. 

28 CofAC to Chief, Mat Div, l Mar 39, AFCF 452.1 
Proc of Aircraft. 



176 BUYING AIRCRAFT 




War Department Subcommittee of the House Appropriations Committee at 
the White House, February 1939. Left to right: Edward T. Taylor, Chairman J. Buell 
Snyder, Joe Starnes, David T Terry, John H. Kerr, and John C. Pugk. 



tary seized the initiative to drive the air 
rearmament program ahead with vigor. 29 
The aggressive leadership of Johnson 



29 Examples of Johnson's vigorous leadership are 
many, e.g., ASW to CofS, ?8 Nov 38, WPD-OPD 
3807-28A; Actg SW to Atty Gen, 10 Nov 38, JAG 
(Army) Gen Ref Br 700.12, 29 Oct 38; ASW to Lock- 
heed et ah, 30 Jul 38, SW files; Aerodigest (June 
J939). P- 26. For a considered appraisal by an officer 
who worked closely with Johnson during his term as 
Assistant Secretary of War, see Gen Burns to TAG, 
7 Feb 47, filed in OCMH with Gen Burns Interv. 



brought results. A scant ten days after 
the White House meeting, the Chief of 
Staff approved the formal staff plan for 
the two-year, 10,000-aircraft program. 
Some staff officers were ordered to draft 
the special legislation required by the 
program, while others were directed to 
study possible means of speeding procure- 
ment under existing statutes. For a start, 
plans were laid to build at least 2,000 of 
the 10,000 aircraft in government-owned 



THE TIDE TURNS 



177 



stand-by facilities, air arsenals, as they 
were called, to be built at Ogden, Utah; 
Denver, Colorado; Dayton, Ohio; Har- 
risburg, Pennsylvania; and at three other 
sites to be selected upon the basis of avail- 
able land, strategic vulnerability, labor 
market, postwar utility to the Air Corps, 
and the like. Production was to be by 
private management using privately de- 
veloped designs. Only the facility would 
be government-owned. 30 Louis Johnson's 
energy soon made itself felt in every 
echelon. 

The 10,000 aircraft program had 
scarcely been defined before the Chief 
of the Air Corps directed his Plans Staff 
to do some "deep thinking" on the long- 
range problems involved. The expan- 
sion program posed many problems but 
none more vexing than the one the Chief 
of the Air Corps himself posed for his 
plans staff. How, he wished to know, 
would it be possible to develop enough 
productive capacity to meet the require- 
ments of the mobilization program on 
time and still maintain a volume of busi- 
ness large enough to keep the industry 
healthy after the program strength had 
been reached at the end of two years. If 
the Air Corps used up every bit of avail- 
able capacity and urged the construction 
of additional facilities to meet the de- 
sired objectives of the expansion pro- 
gram on time, then would not the indus- 
try find itself at the close of the two-year 
program with virtually no orders on 
hand? "Somehow," said General Arnold, 



ia AAF Hist Study, 22, Legislation Relating to the 
AAF Materiel Program, 1939-1945, USAF Hist Div 
Aug 49, p. 5; Memo, ASW for President, 19 Nov 38, 
AFCF 319.1A Rpts; AC Project Reds (Lyon Papers) 
2-C, Data for Defense of 5500 Program; Memo CofAC 
for CofS, 28 Nov 38, WPD-OPD 3807-28A. 




Louis Johnson 

"we must find a way to lick that prob- 
lem." 31 

General Arnold was right. If the Air 
Corps expected the full co-operation of 
the industry, somehow a plan had to be 
worked out to provide assurances that the 
aircraft manufacturers would not be left 
high and dry— and out of business— once 
the Air Corps reached full strength. 
Without the enthusiastic co-operation of 
the industry the whole program was ob- 
viously doomed. With or without gov- 
ernment-owned air arsenals, the aircraft 
designers and the managerial skills of the 
industry would be indispensable. 

The Industry's Reaction 

As General Arnold clearly saw, the 
long-term interests of national defense 

31 Memo, CofAC to Col Carl Spaatz, 18 Nov 38, 
AFCF 360.01A. 



178 



BUYING AIRCRAFT 



were best served by adding productive 
capacity in the aircraft industry. If the 
nation did not become embroiled in war 
there would be no rush of orders, and the 
expanded industry would atrophy. An 
enlarged capacity and an economically 
sound industry were both sound assets 
for national defense. From the military 
point of view both had to be considered. 
On the other hand, it is hardly surprising 
that the aircraft industry as a whole 
tended to be more concerned with the 
immediate problem of orders than with 
the ultimate possibility of a wartime de- 
mand too great for the existing industry 
to handle. After the long, lean years of 
depression the industry preferred, quite 
understandably, to work around the clock 
and even expand if necessary rather than 
see the government set up a series of air 
arsenals that might absorb enough gov- 
ernment orders, after the program was 
completed, to drive some of the privately 
owned aircraft manufacturers out of busi- 
ness. 

The president of the Aeronautical 
Chamber of Commerce, who could speak 
for the industry if anyone could, was cer- 
tain that the existing industry could meet 
the Army's requirements "without strain- 
ing." Other industry spokesmen joined 
the chorus to this effect, especially after 
the rumored target of 10,000 had been 
cut down to the realities of the 5,500 units 
in the expansion program. 32 No doubt 
the industry actually could have met the 
demands of the program in hand. But 
this was no guarantee that adequate ca- 



32 Aviation (February 1939), p. 81; Aerodigest 
(February 1939), p. 42; E. N. Gott to W. W. Barbour, 
1 Mar 38, quoted in Cong Red, March 1, 1939, p, 
2073. 



pacity existed to meet the vastly greater 
requirements of mobilization should war 
come. Responsible officers in the Air 
Corps were well aware of this. Their 
staff studies indicated that productive ca- 
pacity was "far below" mobilization re- 
quirements. 88 Nevertheless, more and 
more they came to accept the manufac- 
turers' point of view. 

Between the time of the White House 
meeting in November 1938 and the pas- 
sage of the expansion program bill the 
following April, Air Corps' policy 
changed markedly. The original plan, 
which emphasized building up produc- 
tive capacity, gave way to a plan that 
stressed the need for keeping existing ca- 
pacity loaded with a sufficient volume 
to save manufacturers from bankruptcy. 
Unfriendly critics of the industry were 
inclined to suggest that "profits" won out 
over "preparedness." It would be fairer, 
perhaps, to put the contention another 
way: of the twin objectives sought by 
the air arm in the name of defense, that 
concerned with fostering a healthy indus- 
try won out over that concerned with 
building up productive capacity for war. 
Both objectives were valid. Neither 
could safely be ignored. 

When Air Corps leaders took the short- 
term rather than the long-term view their 
action was entirely understandable. The 
possibility of being swamped with war 
orders too numerous for the industry to 
supply was a contingency of the remote 
future, but the complaints of the manu- 
facturers were decidedly immediate. It 
was all very well to talk in grandiose 
terms about preparedness and air arse- 



a»CofAC to Chief, Mat Div, 25 Mar 39, WFCF 
452.1 Adaptability of Aircraft to Production. 



THE TIDE TURNS 



179 



nals and stand-by capacity, but while 
Congress debated there were no funds 
and without funds there could be no 
contracts. 

Between the reluctance of Congress to 
appropriate vast sums for preparedness 
and the frequently voiced demands of 
manufacturers seeking more business, Air 
Corps policy makers began to stress the 
immediate rather than the remote. As 
late as April 1939, the Chief of the Mate- 
riel Division seriously proposed stretch- 
ing out current Air Corps contracts over 
a longer period of time to save manufac- 
turers from having to discharge their 
trained employees at the end of the cur- 
rent program. 34 Similarly, the Chief of 
the Air Corps suggested a plan to stretch 
the available appropriations by purchas- 
ing airframes without armament, signal 
equipment, and other accessories. 35 Both 
these proposals were rejected, but the 
mere fact that they were made suggests 
the extent to which Air Corps officials 
were preoccupied during the first half of 
1939 with the task of assuring the indus- 
try enough business to keep it alive. 

Until special or emergency appropria- 
tions were forthcoming there could be 
no contracts placed for aircraft in quan- 
tity over and above the few provided for 
in the regular annual appropriation. 
Without such contracts, manufacturers 
continued to worry about filling up the 
acres of idle capacity in their plants. The 
more they worried, the more they were 
inclined to report that they had plenty 
of capacity available to meet military re- 
quirements. The more often these as- 



»* Chief, Mat Div, to CofAC, 15 Apr 39, AFCF 
004.4. 

35 G-4 to DCofS, 3 Feb 39, WPD-OPD 3807-32-40. 



surances were voiced, the more remote 
became the air arsenal program. 

Even before Congress assembled, offi- 
cials in the War Department had begun 
to cast about for alternatives. A hasty 
survey by air arm officers indicated that 
a comparatively small investment of pri- 
vate capital could increase aircraft out- 
put by as much as 50 percent. 38 On the 
other hand, the air arsenal program would 
require millions in appropriations from 
Congress. Since private financing was 
more expedient than public, the Presi- 
dent's plan for preparedness in the form 
of stand-by capacity simply faded away. 
By April the aviation press was report- 
ing that the administration's proposal 
for "nationalized" facilities had been 
shelved. 37 

The month of April 1939 marked a 
conscious turning point in the attitude 
of the industry toward the rearmament 
program. Down to the passage of the 
bill authorizing a 6,000 aircraft ceiling, 
most manufacturers were worried about 
filling their plants. Thereafter, more 
and more manufacturers began to worry 
about finding enough floor space to meet 
their production requirements. Money, 
of course, made the difference. Toward 
the end of April Congress appropriated 
nearly $27,000,000 for immediate ex- 
penditure on new equipment, more than 
$3 1,000,000' more for expenditure during 
the fiscal year, and over $18,000,000 to 
cover previous authorizations. In all, 
Congress provided some $57,000,000 for 
new equipment. The golden rain had 



3 « Memo, ASW for CofAC, is Dec 38; and Memo, 
CofAC for ASW, 5 Jan 39- Both in AFCF 45a. 1 
Proc of Aircraft. 

37 Sayre and Stubblefield, "Measures for Defense," 
Aviation (April 1939), p. gi. 



180 



BUYING AIRCRAFT 



begun. Passage of a supplementary mili- 
tary appropriation in July in response to 
an appeal from the President brought the 
Air Corps another $89,000,000 for imme- 
diate expenditure plus contract authori- 
zation of $44,000,000 more. 38 The day 
after the regular fiscal year 1940 appro- 
priation bill passed, Air Corps officials an- 
nounced the signing of contracts for 57 1 
airplanes worth some $19,000,000. When 
the supplementary funds became avail- 
able in July, an even greater torrent of 
orders went out to the industry. On 10 
August the Air Corps contracted for 
nearly $86,000,000 worth of aircraft, the 
largest single day of business in the history 
of the industry up to that time. In fact, 
this one day's orders amounted to more 
business than the industry had known 
in any full year in peacetime down to 

1937- 39 

Inevitably, however, all this good for- 
tune was to be compounded with diffi- 
culties. Even before the torrent of funds 
could be transmuted into contracts, there 
were warning cries of shortages from the 
industry. While most preparedness dis- 
cussion had been centered around air- 
frame capacity, the equally menacing 
question of capacity in accessory plants 
and material suppliers had been virtu- 
ally ignored. 

Aluminum offers a case in point. The 
average airframe was almost 70 percent 
by weight aluminum and 29 percent 
steel. Aluminum producers were sure 
they could meet the demand. At an 
average of 7,000 pounds of aluminum 

38 gg Stat 606, Military Appropriations Act, 1940, 
April 26, 1939, and 53 Stat 995, Supplementary Ap- 
propriation, July i, 1939. 

3 * Aerodigest (May 1939), p. 28 and Aviation (Sep- 
tember 1939), p. 52. 



per airframe, the total weight required 
for the expansion program fell well with- 
in the aluminum industry's annual ca- 
pacity. Unfortunately, airframe manu- 
facturers' orders and indeed their needs 
could not be spread evenly over the en- 
tire year. They required most of the 
necessary weight in aluminum toward 
the beginning of their production runs 
and virtually all began producing at 
about the same time, since the Air Corps 
placed the bulk of its contracts all within 
a few hours of one another. This con- 
centration of orders, which threatened to 
swamp the aluminum industry, was bad 
enough in itself, but there was a further 
complication. The aluminum industry 
was fully capable of meeting the total 
demand of aircraft manufacturers in alu- 
minum sheet of standard gauges, but 
forgings, castings, and extrusions raised 
an entirely different problem. Through- 
out the decade of the thirties these items 
had been coming into greater use. With 
the arrival of big orders, longer produc- 
tion runs— real mass production— their 
use, especially extrusions, might be ex- 
pected to increase. 40 

Aluminum was only one item for con- 
cern. Elsewhere other shortages threat- 
ened. Production delays on the part of 
a wheel manufacturer brought shortages 
in the Curtiss plant that held up produc- 
tion of the P-36 for five days. A shortage 
of gun-synchronizers delayed production 
for twenty days. Hard-to-manufacture 
hydraulic pumps for use in retraction 



40 Intercompany Memo, J. E. Schaefer, Stearman 
Division of Boeing, to J. P. Murray, 13 Apr 39, AHO 
Plans Div 145.93-182. Breakdown of average airframe 
by weight in aluminum and steel is based on Brig 
Gen G. H. Brett, "Procurement for Defense," Avia- 
tion (August 1940), p. 42. 



THE TIDE TURNS 



181 



gear and other similar applications soon 
became critical as the two or three firms 
skilled in making this item found them- 
selves flooded with orders. 41 When man- 
ufacturers, hard pressed for highly skilled 
labor, began to raid each other's shops to 
lure away men, it became evident that 
some sort of action on the part of the gov- 
ernment would be necessary to ensure a 
smooth and efficient flow of resources to 
the industry. 42 The War Department 
had mobilization plans setting up agen- 
cies to control the flow of resources in 
case of war, but the United States was not 
yet at war. The problems had arrived 
before the war; the mobilization plans 
were inadequate. 43 Improvisation would 
be necessary. At the end of June 1 939 the 
Chief of the Air Corps sent invitations 
to a large number of leaders throughout 
the aircraft industry, inviting them to a 
conference to be held in his office during 
July to consider their common problems. 

OCAC Conference, July ig^g 

The call that went out to industry 
leaders offers something of an index of 
the progress in air arm planning since 
the inception of the expansion program 
during the previous November. Then 
a peacetime atmosphere prevailed. Econ- 
omy was the watchword. Manufacturers 
attending a conference in Washington in 



41 Shortage complaints are scattered throughout 
the files for this period. See, for example, Curtiss- 
Wright to Chief, Mat Div, 18 Jan 39, SW files, Air- 
craft, item 1110a; and Memo, CofAC for SW, 25 Jul 
39, AHO Plans Div 145.93-182. 

42 Memo, CofAC to ASW, 21 Feb 39, AHO Plans 
Div 145.93-182. 

1 3 R&R, Plans Sec to CofAC, 17 Apr 39, AHO Plans 
Div 145.93-182. 



the summer of 1938 were merely in- 
structed to come with data on the pro- 
ductive capacity of their plants. 44 But 
by July 1939 a new vitality was evident. 
Invitations to the industry specified the 
agenda in detail. Moreover, individual 
manufacturers were instructed to bring 
not opinions on the capacity of their 
plants but facts, explicit information con- 
cerning floor space, employees, facility 
costs, and the like. 45 

Just as the invitations to the July con- 
ference reflected something of the grow- 
ing awareness of the real problems that 
beset the expansion program, so too the 
welcoming remarks of the presiding offi- 
cials gave a revealing insight on War De- 
partment leadership. Assistant Secretary 
of War Johnson spoke of preparedness. 
With singleness of purpose he saw the 
ultimate objective: adequate productive 
capacity to provide the nation's air power 
requirements in time of war. For John- 
son there seemed to be no doubt that war 
was inevitable, and he bent every effort 
to meet that war prepared. In contrast 
to the views of the Assistant Secretary 
were those of General Arnold. He saw 
two problems before the conference. 
First there was the immediate problem, 
the Air Corps' expansion program, which 
was actually in hand. Second, there was 



44 Actg CofAC to Glenn L. Martin et al., 16 Aug 
38, SW files, AC Gen Questions, item 550a, 16 Aug 
38. The request for estimates of productive capacity 
in terms of dollar values suggests the crudity of the 
measurements involved. For an example of the acute 
emphasis on economy that dominated at the time, 
see, Dir, Planning Br, OASW, 145.93-182. West 
coast procurement planning officers were not invited 
to the Washington conference in order to save travel 
expenses. 

45 ASW to leading aircraft industry manufacturers, 
30 Jun 39, AFCF 004.4. 



182 



BUYING AIRCRAFT 



a possible future problem, an emergency 
program, if war should come. 46 

Once again General Arnold saw clearly 
the essential dilemma of the Air Corps. 
A solution to one problem did not of 
necessity mean a solution to the other. 
Rather than impose orders from above, 
he moved hesitantly and cautiously. He 
made no effort to force the manufacturers 
into any pattern or plan predetermined 
by the Air Corps. "You are going to 
write your own ticket," General Arnold 
told his audience. In short, the manu- 
facturers learned that leadership by co- 
operation would substitute, for mandates 
from above, the "Government regula- 
tion," which so many of them resented. 
This method could be called an abdica- 
tion of leadership to the business inter- 
ests. Before judging, however, one should 
see the whole problem. The Chief of 
the Air Corps was responsible for the 
aerial defense of the nation. When Gen- 
eral Arnold assumed command in Sep- 
tember igg8 he found the nation virtu- 
ally without air defense against the grow- 
ing might of the dictatorships. He knew 
he must depend upon the manufacturers 
to provide the requisite airplanes. No 
hastily contrived government-owned fa- 
cilities could supply the need without the 
fullest co-operation of the existing indus- 
try in providing the necessary designs 
and engineering talent. General Arnold's 
most significant contribution to the cause 
of national defense may have been his 
early recognition that the Air Corps could 
no more order production from the air- 



49 Proceedings of Air Corps Procurement Confer- 
ence (hereafter cited July Conference Proceedings), 
10 Jul 39, AFCF 337.1 Conference. Unless otherwise 
stated, the following discussion of the conference is 
based on this source. 



craft industry than it could order appro- 
priations from Congress. As the subse- 
quent war years were to reveal, a skillful 
and timely use of the carrot with only an 
occasional use of the club won the best 
results in both cases. 

The problem before the conference, 
regardless of who formulated the answer, 
was one of increasing productive capacity 
to meet first the requirements of the ex- 
pansion program and then the needs of 
a possible future emergency. After rais- 
ing the first obvious solution of using 
multiple-shift operations, General Ar- 
nold opened the conference for discus- 
sion. 

One means suggested for increasing 
production was the extensive use of sub- 
contracting. Some of the manufacturers 
present opposed the idea. For the most 
part the objections came from the larger 
firms with heavy investments in floor 
space and tools. They wanted to keep 
their plants working at capacity even 
when the expansion program came to an 
end. They were obviously anxious not 
to encourage a whole host of small parts 
manufacturers, each with a low overhead, 
to become competitors. On the other 
hand, some of the smaller firms were quite 
enthusiastic about subcontracting. Some 
of them had already discovered they 
could make more money in supplying 
specialty items to the larger firms than 
they could hope to make in the high-risk 
business of entering competitions to build 
complete military aircraft. Some manu- 
facturers with but limited capacity and 
inadequate capital favored subcontract- 
ing because it permitted them to accept 
production contracts beyond their imme- 
diate capacity in the hope of earning 
profits to plow back into expansion. To 



THE TIDE TURNS 



183 



this a representative of OASW, long con- 
cerned with the problems of wartime 
mobilization, added a warning note: it 
would be well to learn to make use of 
subcontractors in peacetime because vari- 
ous shortages in wartime might make 
plant expansion impossible. 

The conference reached no simple so- 
lution to the matter of subcontracting. 
All agreed that some subcontracting 
would be necessary, but a wide differ- 
ence of opinion persisted as to the degree 
desirable. In any event, whether exten- 
sive or limited, subcontractors would 
have to be trained. This in turn gave 
rise to a discussion of educational orders. 

In 1939 Congress provided first $2,000,- 
000 and then later an additional $14,500,- 
000 to support an educational order pro- 
gram for Army items. 47 At last substantial 
sums were available to educate new 
sources. But instead of educating a large 
number of inexperienced producers, the 
Air Corps devoted its share of the first 
grant to the purchase of a training air- 
craft from two aircraft manufacturers. 
The industrial planners of the air arm 
felt that airframes rather than accessories 
would constitute the most serious choke- 
point in production. Airframes, engines, 
and propellers, they argued, were the ba- 
sic items upon which available educa- 
tional funds should be spent. 48 Since the 

47 52 Stat 707, June 16, 1938, authorized educa- 
tional orders, and 52 Stat 1153, June 25, 1938, appro- 
priated $2,000,000 for the purposes. 53 Stat 560, 
April 3, 1938, authorized S34.500.000 for educational 
orders, but the regular appropriation act for 1940, 
53 Stat 595, April 26, 1939, actually appropriated 
only $2,000,000. A supplementary act, however, 53 
Stat 995, July 1, 1939, subsequently appropriated 
114,500,000 for educational orders in fiscal 1940. 

48 Chief, Industrial Planning Sec, to Chief, IVfat 
Div, 1 Mar 39, AFCF 032k; Exec, OCAC, to ASW, 
2 Mar 39, AFCF 030 President and Congress. 



ground rules of OASW stipulated that 
only items that would long remain stand- 
ard should be considered for educational 
orders, this led air arm officials to select 
cargo and training airplanes as most suit- 
able for educational orders. 49 

As the expansion program gathered 
headway it became increasingly clear that 
accessories and components were to be 
the really serious bottlenecks. Early in 
the summer of 1939 it was apparent that 
collector rings (exhaust manifolds for air- 
cooled engines) and oleo struts were go- 
ing to be critical items for which it would 
be well to educate new sources. 50 By the 
following summer the fundamental mis- 
takes in Air Corps policy regarding edu- 
cational orders became evident. Not 
airframes but dozens of components were 
the real candidates for education. Mag- 
netos, carburetors, starters, prop hubs, 
camera lenses, gyro-pilots, and a flock of 
other items were critically short. Any or 
all of these accessories would have re- 
sponded favorably to educational or- 
ders. 51 Unfortunately, by the time this 
was recognized the Air Corps had lost its 
opportunity; the Assistant Secretary had 
long since precluded the use of any fur- 
ther educational order funds on air arm 
projects inasmuch as the aviation expan- 
sion program was itself a gigantic educa- 
tional order. 52 

Industry and Army representatives at 



48 Memo, Lt Col R. L. Walsh for Gen Arnold, 
23 Aug 39, AHO Plans Div 145.93-182. 
w Ibid. 

51 Unsigned Memo for Chief, Mat Div, 10 Jul 40, 
AC Project Reds (Lyon Papers), folder n. Educa- 
tional Orders and Industrial Planning, AFCF. 

52 Notes prepared for Gen Arnold on Education 
Orders, 1 Nov 3g, AC Project Reds (Lyon Papers), 
folder 11, Educational Orders and Industrial Plan- 
ning, AFCF. 



184 



BUYING AIRCRAFT 



the July 1939 conference realized that 
even extensive subcontracting would not 
provide all the necessary additional pro- 
duction capacity for an emergency or 
wartime program. Even if educational 
order funds were plentiful and wisely 
expended, it would be impossible to push 
up the level of airframe production in- 
definitely by this method. There were, 
as everyone present realized, only two 
alternatives left. The government could 
erect shadow factories, stand-by facilities, 
or the individual manufacturers could 
expand their own plants. 

Where possible, subcontracting was to 
be preferred to building new facilities. 
This was the official War Department 
policy. As to the choice between govern- 
ment-built plants and privately financed 
expansions, the industry in July 1939 
wanted neither but preferred the latter 
alternative. Col. H. K. Rutherford, rep- 
resenting the mobilization planners of 
OASW, probably reflected industry opin- 
ion fairly when he labeled shadow fac- 
tories "unsatisfactory, expensive" and a 
"last resort." 63 Privately financed ex- 
pansion, then, was to be favored. But 
the aircraft manufacturers were still not 
anxious to expand. 

Ever since the President had suggested 
a 10,000-aircraft program, aircraft build- 
ers had been warning one another not to 
get caught with productive capacity too 
great to be profitably employed when the 
current program concluded. The mem- 
ory of the long depression was too vivid 



53 July Conference Proceedings, p. 18. For a long 
detailed opinion from the industry on this point, 
see C. A. VanDusen, Consolidated Aircraft Corp., 
to Procurement Planning Representative in Los 
Angeles, 12 Jun 39, AFCF 004.4. 



to forget. "Having faced the cold shad- 
ows of a vacant factory," said an official 
of United Aircraft, "we had no appetite 
for more of the same." 54 "Don't let's 
get stampeded" into building needless 
capacity, editorialized Aviation magazine 
with a worried look at the long-term fu- 
ture and its bleak prospects. 55 When 
Glenn L. Martin told all those present 
at the conference that the industry had 
sufficient capacity to do the job on hand, 
he was only voicing an opinion widely 
accepted by the trade. Why expand 
when existing facilities would be more 
than ample? 58 

The industry was unanimous in its 
opposition to expansion— or so it would 
seem. When speaking for the group or 
to the public at large each individual 
manufacturer opposed expansion. But 
in practice, the manufacturers behaved 
quite differently. When confronted with 
tempting offers for long production runs 
beyond their existing capabilities, indi- 
vidual firms seemed to have no qualms 
about expanding when necessary. Air- 
frame manufacturers had already built a 
million square feet of floor space in the 
first six months of 1939, an increase of 
17 percent. Moreover, productive ca- 
pacity of the engine manufacturers had 
been increased 20 percent in the same 
period. 57 

In short, the aircraft manufacturers 
were like large-scale commodity farmers. 
They agreed in conclave that increased 
production would threaten a market glut, 
then hurried home to consider means for 



54 Wilson, Slipstream, p. 220. 

55 Aviation (December 1938), p. 19. 
5S July Conference Proceedings, pp. 12-13. 
57 ACC news release, November 13, 1939. 



THE TIDE TURNS 



185 



expanding their plants. Glenn L. Martin 
offers a case in point. He was sure the 
existing industry could do the job, yet 
even as he spoke, workmen were putting 
the final touches upon a magnificent new 
plant with nearly a half-million feet of 
floor space that he had just constructed 
to handle a big order from the French 
Government. 58 

The phenomenon was quite simple. 
Those who received orders and needed 
to expand went right ahead and did so. 
But the industry as a whole protested in 
unison that plenty of capacity was avail- 
able. Even after war broke out in Eu- 
rope, the aviation press still carried warn- 
ings against foolish plant expansions, and 
those with orders went right ahead and 
ignored the warnings. 59 Behind these 
contradictions lay an obvious explana- 
tion. Throughout the industry there was 
an underlying fear of the administration's 
air arsenal plan. Individually and collec- 
tively, manufacturers felt impelled to in- 
sist that plenty of idle capacity was avail- 
able, partly in the hope of attracting new 
orders to themselves and partly to fore- 
stall the threat of government-financed 
stand-by plants that might be but a first 
step toward nationalization of the in- 
dustry. 60 

Not surprisingly, then, the manufac- 
turers who attended the Air Corps pro- 



58 Fortune (December 1939), pp, 12, 73. 

59 Marcus Nadler, "Economic Study of Fighting 
Nations Indicates No War-Order Windfall," Printers 
Ink (October 6, 1939), p. 11; Aviation (October 1939), 
p. 53. 

G0 See, for example, ACC Info Bull No. 16, 28 Nov 
39, with facsimile article, S. B. Altick, "Across the 
Skyways," New York Sun, November 18, 1939, article 
captioned, "Nationalization of Entire Aviation In- 
dustry Threatened by Left Wingers in Washington." 



curement conference in July 1939 dis- 
played no enthusiasm for further expan- 
sion and were quite willing to assert that 
plenty of capacity existed to meet the re- 
quirements of the expansion program. 
Their contentions were, however, merely 
opinions and not facts. Moreover, those 
who attended the conference could give 
no assurances, not even opinions, on 
whether or not the extant industry could 
meet the requirements of mobilization 
if war should come. The truth was that 
nobody knew what sort of production the 
industry might achieve under wartime 
conditions. Never having enjoyed really 
large orders, most manufacturers had 
little idea of the maximum level of out- 
put they might achieve if fully tooled for 
mass production. 

Would the industry have to expand to 
meet the demands of war? Without some 
means of determining productive capac- 
ity no one could tell. Manufacturers' 
opinions were far too subject to colora- 
tion by the hope of further business and 
the fear of competition from government- 
owned plants. Objective criteria were 
needed to measure productive capacity 
impartially. General Arnold asked for 
constructive proposals. He wanted a 
yardstick that would measure productive 
capacity accurately and fairly. Although 
a number of the industry representatives 
present made helpful suggestions for such 
a yardstick, they preferred to leave the 
details to a military board. In a highly 
competitive industry, each manufacturer 
was willing to co-operate with air arm 
officials but reluctant to divulge produc- 
tion data to a rival. 61 The close co-opera- 



July Conference Proceedings, pp. 4-9. 



186 



BUYING AIRCRAFT 



tion among manufacturers that marked 
the war years was still a long way off. 

So the conference ended. Army offi- 
cers and manufacturers alike realized that 
no long-term planning was possible until 
the necessary facts could be obtained. It 
must have been evident to all that what 
the Assistant Secretary of War said in 
November 1938 was still true: the pro- 
ductive capacity of the aircraft industry 
was unknown. But now only two months 
remained before World War II would 
break out in Europe. 

The Search for a Yardstick 

When the industry and air arm leaders 
finished their deliberations at the Office 
of the Chief of Air Corps in July 1939, 
at least one conclusion was evident: no 
further mobilization planning was possi- 
ble without "facts." Yet even upon this 
seemingly obvious word there was no 
real agreement. 

Long before the OCAC conference in 
July, Air Corps officers had recognized 
the acute need for accurate information 
on the capacity of the nation's industry 
to turn out aircraft. The matter had 
been discussed at a similar meeting with 
industry representatives almost a year 
earlier. 62 Everyone present seemed to 
agree that the existing factory plans 
drawn up by officers of the Industrial 
Planning Section at Wright Field were 
unreliable. Even the manufacturers 
whose plants were surveyed and sched- 
uled admitted this. On the other hand, 



8a This and the following several paragraphs are 
largely based upon Critical Analysis and Evaluation 
of AAF Pre-World War II Purchased Procurement 
Planning Data Program, 1 Jul 47, prepared by In- 
dustrial Planning Sec, Proc Div, AMC, pp. 8ff. 



these were the very men who protested 
that the preparation of really accurate 
surveys to measure potential productive 
capacity would require a great deal of 
time and money. 63 Such surveys de- 
manded the services of highly paid 
and highly skilled production engineers 
whom few aircraft manufacturers would 
or could afford to divert from their nor- 
mal duties. The Air Corps response to 
this reluctance was the so-called data 
contract. 

Data Contracts 

After some preliminary delays between 
October 1938 and April 1939 while funds 
were secured and specifications drawn up, 
procurement officers negotiated a number 
of data contracts with aircraft and engine 
firms. Subsequently, the effort to pur- 
chase "information" was broadened con- 
siderably by including a data clause in 
all regular contracts for supplies. By 
this means manufacturers were led to 
deliver reports on future productive ca- 
pabilities along with the items they 
turned off their assembly lines. 

The effort of air arm officers to secure 
facts on which to base decisions concern- 
ing mobilization was undoubtedly sound. 
Unfortunately, the plan was a partial fail- 
ure in execution. Insofar as the data 
contract program induced manufacturers 
to think and plan in terms of large-scale 
mass production even before they re- 
ceived large orders, the program was a 



83 Ibid., pp. 10-n. See also Wilson, Slipstream, 
pp. 213-16, attributing to one leading aircraft builder 
the opinion that the work of the air arm mobiliza- 
tion planners amounted to "twenty years of hog- 
wash." 



THE TIDE TURNS 



187 



success. 64 But the data actually pur- 
chased (at a cost of something- over 
$100,000 for the initial phase of the pro- 
gram alone) was never effectively uti- 
lized. 85 

A fundamental flaw in conception 
virtually wrecked the whole program. 
Instead of purchasing surveys of each 
manufacturer's facilities as a whole, the 
studies bought were posited upon an as- 
sumed production of a single aircraft, 
engine, or accessory. When that item 
became obsolete or when the manufac- 
turer in question took on additional or- 
ders—from the French, the British, or the 
Navy for example— the purchased data 
lost much if not all of its meaning. Simi- 
larly, the data lost much of its value since 
it failed to consider the possibility of re- 
designing items to facilitate mass pro- 
duction, 66 

In the last analysis, of course, estimated 
production schedules prepared by indi- 
vidual contractors themselves were not 
to be relied upon. The manufacturers 
tended to reason from assumptions that 
were too optimistic. In promising a 
given level of bomber production for 
some future date such as M-day plus 
twelve months, for example, a manufac- 
turer assumed rather too readily that de- 
sign would be frozen, labor would be 
available in sufficient quantities, all items 



64 Wilson, Slipstream, page 234, indicates that 
United Aircraft was inspired by the discussions 
alone, without waiting for a data contract, to under- 
take rather elaborate advance war planning. Other 
leading firms followed suit. 

85 Critical Analysis and Evaluation of AAF Pre- 
World War II Purchased Procurement Planning 
Data Program, which concludes bluntly: "The pur- 
chased studies were of little use. . . ." 

68 Ibid., p. 3. See list of "major deficiencies of the 
Purchased Planning Data Program." 



of government-furnished equipment 
would be on hand when required, addi- 
tional machine tools could be procured 
when needed, and so on. 67 Such ideal- 
ized assumptions made for unrealistic 
scheduling. At best, the average manu- 
facturer was caught in a crossfire of con- 
flicting interests. He was anxious to sell 
air arm officers on the idea that he had 
plenty of available capacity in the hope 
of landing a big production order. Yet 
at the very same time he may well have 
been anxious to secure government as- 
sistance in financing a plant expansion. 
In short, the manufacturer with a data 
contract was a special pleader rather than 
an objective reporter. A contract that 
asked him to estimate his productive ca- 
pacity for some future date asked for an 
opinion, an opinion based as much upon 
aspiration as upon fact. Thus, manufac- 
turers were asked to provide the very in- 
formation they were least able to give 
objectively. And, ironically, they were 
not asked— until almost too late— to pro- 
vide the data they were entirely capable 
of delivering: full, factual data concern- 
ing their facilities and operations— the 
available floor area in their plants, em- 
ployees in each shift, and so on. 

Data contracts were not the only source 
of information available on the nation's 
aircraft productive capacity. The Aero- 
nautical Chamber of Commerce, repre- 
senting go percent of the industry, offered 
a possible alternative means of determin- 



OT Chief, Mat Div, to CofAC, 25 Jul 39, AHO Plans 
Div 145.93-182, Some manufacturers were fully 
aware of the falseness of these assumptions and as a 
consequence were reluctant to take data contracts. 
See Chief, Mat Div, to CofAC, 4 May 39, AHO Plans 
Div 145.93-182. 



188 



BUYING AIRCRAFT 



ing capacity. British experience with a 
counterpart organization, The Society of 
British Aircraft Constructors, suggested 
that this industry trade association and 
clearinghouse could provide a very use- 
ful liaison between individual aircraft 
manufacturers and the air arm procure- 
ment organizations. 68 Self-interest would 
ensure the enthusiastic co-operation of 
the Aeronautical Chamber of Commerce. 
Moreover, in the role of confidential 
agent, the ACC might be able to secure 
information from the various manufac- 
turers that each would be reluctant to 
report to government officials for fear of 
impairing his bargaining position in sub- 
sequent contract negotiations. Finally, 
and perhaps of most importance, the 
ACC could command from the ranks of 
its members the very best in technical 
skills. 

A committee sponsored by the ACC to 
measure the nation's productive capacity 
could be depended upon to have the serv- 
ices of some of the best aircraft produc- 
tion engineers in the country. Such a 
survey actually compiled by the ACC 
during the summer of 1939 reflected this 
competence the more pointedly by the 
contrast it presented to similar surveys 
made by the officers of the Industrial 
Planning Section at Wright Field. 68 

On the other hand, if there were ad- 
vantages in relying upon the Aeronauti- 
cal Chamber of Commerce, there were 
also decided disadvantages. If Air Corps 
officers depended upon this trade associ- 



68 Military Attached London, Annual Rpt, 13 Sep 
38, AMC CADO, C 21/38 Great Britain. 

00 For an example of the kind of detailed survey 
made by ACC, see Curtiss-Wright, St. Louis Div to 
ACC, 17 Jul ^g, AFCF, 004.4 Mf "- 



ation for the basic data upon which to 
make vital decisions concerning national 
defense, they would lay themselves open 
to the politically dangerous charge of 
having surrendered to the business inter- 
ests. General Arnold probably selected 
the wisest course when he ordered Mate- 
riel Division officers to make their own 
estimates of available productive capac- 
ity. But at the same time, he held the 
door open for the ACC by authorizing 
it access to the classified military contracts 
of its members. By this means the ACC 
was retained as an important supplemen- 
tary source of information and a medium 
for bringing suggestions and criticisms 
from the industry to Air Corps head- 
quarters. 70 

While General Arnold's decision no 
doubt retained full responsibility for the 
mobilization effort where it properly 
should have rested, there was, neverthe- 
less, some loss of effectiveness. Officers 
who were admittedly not production spe- 
cialists had to grope and fumble for 
solutions to highly technical questions. 
Inevitably they made mistakes while 
learning anew what the production engi- 
neers already understood. This was es- 
sentially the position of those officers who 
were ordered to serve on a special board 
directed to contrive some sort of yard- 
stick for measuring the aircraft produc- 
tive capacity of the United States. 



10 Memo, CofAC for Col Echols, 31 Aug 39, WFCF 
381. For a discussion of the problems encountered 
when a government agency hands over some of its 
functions to private hands, see the account of Fred- 
eric C. Lane (Ships for Victory: A History of Ship- 
building Under the U.S. Maritime Commission in 
World War II (Baltimore: The Johns Hopkins Press, 
1951, pp. 97ft.) on the relations of the Maritime 
Commission with the firm of Gibbs and Cox. 



THE TIDE TURNS 



189 



The Yardstick Board 

Less than a week after the July 1939 
conference in OCAC, the chief of the 
Materiel Division appointed a special 
board of officers to study aircraft produc- 
tion. 71 This group, known informally at 
Wright Field as the Yardstick Board, was 
to devise a method or formula with which 
it would be possible to measure the ca- 
pacity of any given facility in the indus- 
try. Despite the years of study devoted 
to the general problem by the Industrial 
Planning Section, the facts and figures 
necessary for the board's deliberations 
were not at hand. A new questionnaire 
had to be sent out to the industry. Not 
until the end of July 1939 could the board 
begin its work; its final report appeared 
during the middle of September, after 
the outbreak of war in Europe. 72 

The board had at its disposal a num- 
ber of tools or techniques for estimating 
productive capacity if its members would 
but seek far enough. For a very crude 
index, there was the industry's produc- 
tion record in two previous periods of 
mass production. During World War I, 
aircraft yearly output rose from 400 units 
in 1916 to 2,000 units in 1917, and finally 
to 14,000-odd units in 1918. Had the 
officers of the yardstick board actually 
used these figures they would have ob- 
tained a false impression of the accelera- 
tion in production to be expected in 
World War II. Over a comparable pe- 
riod of years, from 1938 to 1941, aircraft 



71 Memo, ACoFAC for ESW, 26 Jul 39, AFCF 004.4 
Mfrs. 

72 TWX, Contract Sec, WF, to Plans Sec, OCAC, 1 
Aug 39, and extract, Proceedings (of Yardstick Board) 
15 Sep 39, AFCF, AC Project Reds (Lyon Papers), bk. 
82, Capacity of the Aircraft Industry. 



output was never much more than double 
that of the previous year. Interestingly 
enough, the more recent experience of 
the boom years 1926-29 provided a far 
more accurate picture of what to expect. 
The rate of increase in the boom was 
almost exactly that achieved during the 
years 1938-41. At best, to be sure, the 
record of accelerating output in previous 
periods of mass production was suggestive 
only. The validity of this earlier expe- 
rience as a basis for comparison was, to 
say the least, made questionable by the 
intervening technical revolution in air- 
craft structures. 

Dollar value of output offered another 
crude yardstick to measure capacity in 
the aircraft industry. Since statistics on 
total dollar output, average unit costs, 
total unit production, and the like were 
readily available, it was a relatively sim- 
ple matter to make some rough correla- 
tions between expenditures and output. 
Dollar volume as a yardstick had the ad- 
vantage of providing a convenient basis 
of comparison between manufacturers of 
widely different types and models. More- 
over, this yardstick had been used before 
by the Air Corps and was a familiar one 
in the industry. 73 On the other hand, 
dollar volume as a measurement of pro- 
duction suffered from several intrinsic 
weaknesses. To begin with, factors such 
as the different levels of wages in various 
parts of the country and the generally 
rising level of wages and material costs 
injected variables that upset the formula. 
More significantly, just as in the case of 
World War I or the boom years, rapid 
changes in technology threatened to nul- 



7S Actg CoFAC to Glenn L. Martin, 16 Aug 38, 
SW files, AC Gen Questions, item 550a, 



190 



BUYING AIRCRAFT 



lify the validity of much past experience. 
As manufacturers received larger orders, 
they installed more and more production 
tooling. As mass-production techniques 
replaced job-shop methods, output in- 
creased surprisingly. Estimates of poten- 
tial production based on assumptions 
framed in terms of job-shop conditions 
had to be scrapped to make way for the 
new situation. Clearly, the commonly 
used dollar volume yardstick was no 
longer accurate. 74 

When General Arnold asked the man- 
ufacturers attending the OCAC confer- 
ence for help in contriving a yardstick, 
he roused a lively discussion and turned 
up some useful ideas. Everyone present 
seemed to agree that the old dollar vol- 
ume yardstick was inadequate. The real 
problem was to devise a common denomi- 
nator, a measurement valid whether ap- 
plied to giant bombers or puddle jump- 
ers, the Army's tiny liaison airplanes. 
James H. Kindelberger of North Ameri- 
can suggested airframe pounds as such a 
common denominator. General Arnold 
preferred airframe pounds per square 
foot. Then Mr. Kindelberger suggested 
that man-hours of' productive labor per 
square foot of plant in relation to air- 
frame pounds produced was a formula 
already employed by the Germans. Mr. 
L. L. Bell, of Bell Aircraft felt this for- 
mula might be improved if some consid- 
eration could be given to whether or not 
the aircraft in question had ever been in 
production before. 75 



14 For a rather harsh judgment on the failure of 
Air Corps officers to foresee the importance of pro- 
duction tooling, see Review of Me thods Employed 
by the AAF . . ., cited lch. VII, n. 6.1 

15 July Conference Proceedings, pp. 4-9. 



These and a number of other ideas put 
forth by the representatives of the air- 
craft industry at the conference provided 
a useful starting point for the Yardstick 
Board. Fortunately at least one engineer, 
Mr. T. P. Wright, who at the time was 
director of engineering for the Curtiss- 
Wright Corporation, had gone beyond 
this starting point and had published a 
thoughtful paper on this very question 
of estimating capacity. 76 The problem 
Mr. Wright posed was virtually identical 
to that facing air arm planners: can the 
existing industry handle the expansion 
program proposed by the President? To 
answer this question he worked out in 
detail a series of formulas using airframe 
pounds, productive floor space, man- 
hours, and the like. Then, having de- 
rived his formulas as tools, he proceeded 
to apply them to the specific situation in 
hand. As an interested party, an air- 
craft builder, looking for military orders, 
Wright's conclusions might be subject to 
challenge. But this in no way minimized 
his brilliant contribution in suggesting 
methods for analyzing capacity. 

The available evidence does not make 
clear the extent to which the Yardstick 
Board relied upon Wright's study. 77 The 
degree of the board's obligation is prob- 
ably unimportant since the real signifi- 
cance of Wright's work was that it for- 

76 T. P. Wright, "America's Answer: Gearing Our 
Aviation Industry to the National Defense," Aviation 
(June 19.3c.), pp. z6ff. 

77 Although the board's report does not mention 
Wright's study, it must have been available to the 
members of the board. The Chief of the Materiel 
Division actually went out of his way to urge that 
the Chief of the Air Corps read the study. See TWX, 
Brett to Arnold, 6 Sept 3g, WFCF 008 Policy file, 
Pay-as-you-go. Plans officers, OCAC, were familiar 
with Wright's article also. See Maj M. R. Wood 
to Col Spaatz, 14 Aug 39, AHO Plans Div 145.93-183. 



THE TIDE TURNS 



191 



malized some of the ideas used by various 
leading production engineers and helped 
make the techniques commonplace. 

After extended deliberations the Yard- 
stick Board concluded that the simplest 
and most expressive measure of produc- 
tive capacity was airframe pounds per 
square foot per month. A carefully 
drawn questionnaire brought in the nec- 
essary data from virtually every produc- 
ing unit in the industry. By combining 
the arithmetic average and a modified 
median of these returns, the board found 
that the average figure of production was 
1.20 pounds per square foot per month. 
By similar means the board found that 
the area per productive laborer at maxi- 
mum concentration was 145 square feet, 
that only 81 percent of total area was ac- 
tually productive, that the number of 
pounds per month per man averaged 80, 
that the maximum amount of subcon- 
tracting was 20 percent, and, finally, that 
second-shift operations were only 74 per- 
cent and third shift only 57 percent as 
efficient as first-shift operations. 78 

To work the formula of the Yardstick 
Board, air arm planners had only to ap- 
ply the facts of a given case to these 
known industrial indicators. Thus, for 
example, a manufacturer with 100,000 
square feet of floor and 250 productive 
workers would give the following pro- 
jection or estimate: 

a. 250 employees X 80 lbs./man/mo. = 
20,000 lbs./ mo. current output. 

b. 100,000 sq. ft. X .81 (% of area pro- 
ductive) = 81,000 sq. ft. productive. 



78 Extract, Proceedings of Yardstick Board, 15 Sep 
39, AFCF AC Project Reds (Lyon Papers), bk. 22, 
Capacity of the Aircraft Industry. 



c. 81,000 sq. ft. productive X 1.20 lbs./ 
sq. ft./mo. = 97,200 Ibs./mo. maximum 
production. 

d. 97,200 lbs. /mo. production X .20 (% 
subcontracted) = 19,400 lbs. farmed out to 
subcontractor. 

e. 81,000 sq. ft. productive -r 145 sq. ft./ 
man = 558 first-shift employees at maxi- 
mum. 

f. 558 first shift X .74 (second-shift effi- 
ciency) = 413 employees on second shift at 
maximum. 

g. 558 first shift X .57 (third-shift effi- 
ciency) = 318 employees on third shift at 
maximum. 79 

Though subsequent experience and 
the passage of time demonstrated that 
the board's coefficients were not infalli- 
ble, 80 the yardstick evolved by the board, 
with the help of the industry, gave air 
arm officers a reasonable basis on which 
to premise plans for subsequent steps in 
the expansion program. In short, the 
Yardstick Board accomplished in a mat- 
ter of weeks what the Industrial Planning 
Section failed to do over a period of years. 

Tools for Planning 

The formula derived by the Yardstick 
Board marked an important milestone 
along the route if not the beginning of 
the use of effective statistical techniques 
as a basis for reaching authoritative pol- 
icy decisions on mobilization planning 
in the aircraft field. After this rather 



™ Ibid. 

so Where, for example, the board found productive 
area at 8i percent of total area, subsequent studies 
changed this figure to 85 percent. See K. Perkins 
and M. A. Tracy, Airplane Manufacturing Capacity 
Based on. Factory Areas, OPA Aircraft Rpt 13-A, 
31 Oct 41, AFCF, Outsize, 452.1 Aircraft Manufac- 
turing Capacity. 



192 



BUYING AIRCRAFT 




Theodore P. Wright 



hesitant start, a whole series of statistical 
tools were developed for measuring pro- 
ductive capacity, costs, labor require- 
ments, and the like. These were almost 
entirely the work of Mr. Wright and his 
associates serving as aircraft specialists 
with the Advisory Commission to the 
Council of National Defense (NDAC) 
and its successor agencies, Office of Pro- 
duction Management (OPM) and War 
Production Board (WPB). There is no 
need to expound these formulas in full. 
The detailed reports are readily avail- 
able for those interested in them. Here 
it should be sufficient to suggest some- 
thing of the complex range of subjects 
for which statistical tools were developed. 
In addition to those devised for produc- 
tion planning, similar formulas made it 
possible to estimate probable costs for 
budgetary planning. Others, which es- 
timated unit costs in advance, gave con- 



tract negotiators tools for use in close 
pricing. 81 

Unfortunately, there is evidence to 
show that at least some highly placed air 
arm officers were inclined to ignore the 
formulas. Although the various formu- 
las were made available to officers of the 
Materiel Division, then urged upon them, 
it seems safe to conclude that it was the 
staff of consultants within NDAC and its 
successors who made best use of these 
tools. 82 If Air Corps officers failed to 
utilize all the statistical tools available to 
them, in some instances it may be attrib- 
utable to sheer blindness on the part of 
individuals. But far more significant 
was the breach that separated the regular 
air arm procurement organization from 
the temporary civilian agencies such as 
NDAC. Hastily built, of necessity, the 
civilian production and planning agen- 
cies paid a heavy price in terms of inade- 
quate liaison with corresponding ele- 
ments of the military organization. 

The Realities of September 1939 

There were unavoidable delays in get- 
ting together the information from which 
the Yardstick Board reached its conclu- 

81 Aircraft Br, WPB, Aircraft Manufacturing Ca- 
pacity Based on Factory Area, Aircraft Rpt 13-X. 
15 Mar 42. AFCF 004.4 Bulky. Sec, for example, 
T. P. Wright and A. E. Lombard, Report on Prices 
of Military Airplanes, Airplane Div N'DAC, Rpt 5, 
10 Jul 40, AFCF 452.1-191. 

83 T. P. Wright to Chief, Mat Div, 10 Jul 40, 
AFCF 452.1 Aircraft Gen; R&R, CofAC to Chief, 
Mai Div, 25 Jul 40, "Does this mean anything or is 
it just another report?" Comment 2, Chief, Mat 
Div, to CofAC, "A good rule of thumb ... if one 
wants to take the trouble to figure it out," "My 
people use it in connection with estimates." Com- 
ment 3, CofAC to E. H. Beebe, and No. 4, Beehe 
to CofAC, 27 Jul 40, "It should be useful for plan- 
ning future purchases . . . ," AFCF 452.1-gi. 



THE TIDE TURNS 



193 



sions. Until the board reported, no de- 
tailed planning could be undertaken; 
almost every major decision regarding 
the expansion of capacity remained sus- 
pended. 83 No one could be sure just 
how much it would be necessary to en- 
large the existing industry. Assistant 
Secretary Johnson felt that it must be 
expanded "several times" above current 
capacity. The Chief of the Materiel Di- 
vision directed his staff officers at Wright 
Field to commence plans for a possible 
fivefold expansion 84 — and this only a 
matter of weeks after many of the indus- 
try's most distinguished leaders had as- 
sured the President that no expansion 
would be needed. 85 

Since the Yardstick Board did not re- 
port formally until mid-September 1939, 



83 For evidence of delays imposed by failure to 
have information in hand from the industry, see 
Actg Chief, IPS, to Asst Tech Exec, Mat Div, 9 Sep 
39, WFCF 400.1s. 

M AAF Hist Study 40, pp. 19-20. 

85 Down to the actual outbreak of war in Europe, 
the Aeronautical Chamber of Commerce continued 
to issue assurances that the industry had capacity 
"sufficient for quick deliveries on all future orders 
both at home and abroad." See news release from 
the ACC, August 28, 1939. 



the vital decisions regarding expansion 
were delayed until after war broke out 
in Europe. Precious months were lost 
to the mobilization effort largely because 
of a failure to contrive adequate admin- 
istrative tools for realistic planning dur- 
ing the years of peace. 

If the hour was late and the war very 
real indeed —in Poland if not in France 
—air arm officers in September 1939 
could at least take some comfort from 
the progress of the past nine months of 
gestation. The Air Corps had a pro- 
gram, Congress had provided the funds, 
the aircraft industry was growing rapidly 
on its own initiative, and at last there 
were administrative tools to assist in mak- 
ing the vital decisions necessary to plan 
for an efficient mobilization of the na- 
tion's productive capacity. When the 
President took note of the war in Europe 
and declared a state of limited national 
emergency, some air arm officers felt that 
the last necessary ingredient for success 
had been added; the impetus of war and 
a national emergency, they hoped, would 
banish most of the obstacles that im- 
peded the effort to mobilize the air arm 
while it was still at a peace. 



CHAPTER IX 



Foreign Policy, Politics, and Defense 



When the President declared a state 
of limited emergency soon after the out- 
break of war in Europe in September 
1939, he apparently hoped to secure the 
legal advantages and psychological im- 
petus of a crisis to speed rearmament in 
the United States. The realities of the 
blitzkrieg in Poland, terrifyingly her- 
alded in lurid headlines and nevvsreels, 
seemed to justify his declaration. Each 
new Wehrmacht thrust was an argument 
of the need for stronger national defense. 

Military intelligence reports indicated 
that the German Air Force had something- 
over 8,000 combat aircraft on hand; in 
the United States the Air Corps could 
muster only some 2,400, at best. 1 Con- 
gress had authorized the expansion pro- 
gram of 5,500 aircraft, yet more than half 
this number remained on paper. There 
were 1,178 aircraft on order but undeliv- 
ered, 1,291 on contracts currently under 
consideration, 1,143 m competitions still 
being evaluated, and 186 on options that 
could be exercised. 2 Even if every one 

1 Aircraft Strength and Production Capacity of 
European Air Powers, Chart as of Jul 39, 15 Jan 40, 
AHO Plans Div 145.91-135 QQ. Postwar data 
showed this estimate actually understated German 
strength. See United States Strategic Bombing Sur- 
vey, Aircraft Division Industry Report, 2d ed., Jan 
47, copy in OCMH, exhibit III A and figure IV-i. 

2 Draft Memo, Plans, OCAC, for ASVV, 30 Aug 39, 
AHO Plans Div 145.93-183. Cf. notes on staff meet- 
ings of division chiefs 1939-40, entry for 23 Oct 39, 
AFCF 337 Special. 



of these aircraft were to be made imme- 
diately available to the Air Corps, the 
total strength on hand would fall far be- 
low that of the German air arm. The 
5,500 program, which held such promise 
in the spring of 1939 seemed inadequate 
during the fall. In contrast to the Luft- 
waffe, the Air Corps seemed woefully 
underarmed. 

Only if Congress authorized a larger 
force and granted still larger appropria- 
tions did it appear possible for the air 
arm and the nation's industry to close the 
gap. Unfortunately for the cause of na- 
tional security, the political moon was in 
an awkward phase during most of the pe- 
riod of limited emergency— 1940 would 
be an election year. 

Politics and Armament 

The first session of the Seventy-sixth 
Congress ended 5 August 1939. Thus it 
turned out that Congress was not in ses- 
sion when war broke out in Europe on 
1 September. The President hastily 
called a second session to convene on 21 
September. Meanwhile, the German 
forces had overrun Poland, and its down- 
fall was only ten days away. Had the 
blitzkrieg continued, Congress might well 
have authorized impressive increases in 
the Air Corps without further delay, but 
the blitz did not continue. Even before 



FOREIGN POLICY, POLITICS, AND DEFENSE 



195 



Congress adjourned on 3 November, 
Poland had capitulated and the powers 
were settling down to an apparent stale- 
mate behind the West Wall and the Magi- 
not Line. 

When the third session of the Seventy- 
sixth Congress opened in January 1940, 
insofar as the major powers were con- 
cerned blitzkrieg had turned into "sitz- 
krieg." The menace of Axis might to 
the democracies was as great as before, 
but the sense of urgency had passed. The 
headlines no longer provided daily re- 
minders of the destructive potential of 
air power. 

Shortly after the beginning of the new 
session, the President presented his 
budget. He asked something over $ 1 ,750,- 
000,000 for defense. a This extraordi- 
nary request raised the level of planned 
expenditures far beyond expected in- 
come. Next, the President asked an elec- 
tion year Congress to pass a tax bill to 
make up the anticipated deficit. "To 
Congressional realists," Time magazine 
remarked, this proposal was "sheer ro- 
mance." 4 Congress was clearly in a mood 
for economy— perhaps not so defiantly as 
during the previous winter when one rep- 
resentative had declared that a force of 
15,000 or 20,000 aircraft would "bank- 
rupt" the nation, 5 but certainly the leg- 
islators as a group had little enthusiasm 
for passing tax bills in an election year. 

Four months later, in April 1940, when 
the Appropriations Committee reported 
out a measure to provide funds for the 
War Department during the following 
fiscal year, the committee chairman 



3 H Doc 529, 76th Cong, 3d sess, January 4, 1940. 

4 Time, January 15, 1940, p. 14. 

5 Cong Red, March 3, 1939, p. 2223. 



boasted of having cut, with the approval 
of the Bureau of the Budget and the 
President, more than a hundred million 
dollars from the estimates requested by 
the Department. 

Subsequent events were to prove these 
economies ill-advised, to say the least. 
Yet they were not made without rea- 
son. The Appropriations Committee 
contended that foreign orders placed in 
the United States were stepping up the 
nation's capacity to produce aircraft at 
no expense to the government. Increased 
productive capacity seemed to obviate the 
need for a stand-by reserve to cover the 
lag between production and mobilization 
requirements in an emergency, so why 
burden the taxpayers? 6 Without foreign 
orders, the committee recognized, the 
proposed cuts would be fatal, 7 but the 
bill as presented assumed that the French 
and British were mobilizing the aircraft 
industry in the United States. If export 
orders could take the place of educa- 
tional orders, so much the better. 8 

The proposal to make French and 
British aircraft orders vital cogs in the 
nation's mobilization effort was not the 
first occasion when foreign orders played 
such a central role in the defense of the 
United States. In the months leading up 
to this nation's entry into World War I, 
the situation was remarkably similar in 
many ways. In 1917, as in 1940, pro- 
curement officers found the marketplace 
swarming with French and British pur- 
chasing missions. They learned in 1917 
the important lesson that mobilization is 
not an isolated activity of the War De- 

R House Rpt 1912, 75th Cong, 3d sess, April 2, 
1940, pp. 19-20. 
1 1bid., pp, 2-3. 
s Ibid., pp. 10-1 1. 



196 



BUYING AIRCRAFT 



partment alone but part of a complex 
whole, a pattern in which export orders 
as well as Navy orders must be taken into 
consideration. 

A ircraft Exports and National 
Defense 

When Italy had threatened Ethiopia 
in 1935, the furor over arms manufac- 
turers as warmongers and merchants of 
death once again claimed the attention 
of Congress. The congressmen passed a 
neutrality measure that held out to the 
public the promise that neutrality in a 
warring world could be had by legisla- 
tion. The terms of the measure made it 
unlawful for citizens of the United States 
to sell or transport arms to belligerents 
who had been labeled as such by the 
President. Sales of arms to nonbelliger- 
ents could be consummated only under 
license from a Munitions Control Board 
in the State Department, with an accom- 
paniment of full publicity. In 1936 
Congress widened the neutrality law to 
prohibit loans to belligerents. In 1937 
these measures were replaced with an en- 
tirely new act. While reaffirming the 
previous curbs on the sale of arms to bel- 
ligerents, the new law permitted the sale 
of arms to nonbelligerents only if they 
agreed to pay cash and to take delivery 
in the United States. 9 

The official policy of President Roose- 
velt's administration was, therefore, to 
discourage traffic in arms. Diplomatic 
and consular officials received instruc- 
tions to deny their good offices and the 
use of official channels of communication 



9 Jt Res 51, which became Public Res 27, May 1, 
!937 (5° Stat 121). 



to armament dealers. 10 Similarly, the 
Export-Import Bank adopted a policy of 
refusing loans to foreign nations wishing 
to purchase arms in the United States. 11 
Occasionally the President found a way 
around the law. This was the case, for 
example, in 1937 when the Japanese in- 
vaded China. A strict application of the 
neutrality statutes would have required 
him to cut off the flow of arms from the 
United States to both nations, since the 
law made no distinction between aggres- 
sors and their victims. By refusing to 
declare the "China Incident" a war, ad- 
mittedly a technicality, the President was 
able to avoid the automatic imposition 
of an embargo on the flow of arms so 
essential to the victim of Japanese aggres- 
sion. 

The various neutrality laws passed by 
Congress were by no means dead let- 
ters, forgotten statutes moldering on the 
books. Each of the successive acts had 
teeth and could be enforced. At least 
one group of leading aircraft manufac- 
turers was tried early in 1939 under the 
provisions of a neutrality statute and 
subsequently fined more than a quarter 
of a million dollars for selling airplanes 
and machine guns to warring states in 
Latin America. 12 

The effect of the national neutrality 
policy was to inhibit sales in the very area 
where they would do the most good in 



10 R. W. Moore, Dept of State, to U.S. diplomatic 
and consular offices, si Nov 35, AFCF 360.01 B. 

11 Memo, Maj W. R. Carter for Gen Arnold, 19 
Apr 39, AFCF 452-1-3295- 

12 Fifth Report of the National Munitions Control 
Board, H Doc 876, 76th Cong, gd sess, July 3, 1940, 
ch. VII. The case mentioned here, involving several 
affiliates of Curtiss-Wright, concerned violations of 
Public Resolution 28, May 28, 1934 (48 Statutes 811) 
applying exclusively to the Chaco war. 



FOREIGN POLICY, POLITICS, AND DEFENSE 



197 



building up facilities for national de- 
fense. Faith in the use of neutrality 
legislation to keep the nation clear of war 
seemed to obscure the need for main- 
taining a healthy armament industry as 
an essential to national defense. But 
curbs on the export of arms were not all 
chargeable to Congress and to the pre- 
vailing spirit of isolationism in the na- 
tion at large. Some restrictions on ex- 
ports were imposed by the military 
leaders. 

To protect military secrets during 
World War I, Congress had passed the 
Espionage Act of June 15, 1917, which 
provided heavy penalties for those guilty 
of revealing such secrets to an enemy. 
Inevitably, these grew up an elaborate 
body of administrative practices and poli- 
cies as military men sought to apply the 
law. Amongst these rules and regula- 
tions were those providing a means for 
releasing items of equipment from their 
classification as military secrets when 
their increasing obsolescence no longer 
required such a status. 

Common sense clearly urged the re- 
lease of items from a classified status as 
soon as possible. If items of equipment 
classified as secret during peacetime were 
not released until they were so utterly 
obsolete as to be virtually worthless, man- 
ufacturers could not hope to find second- 
ary markets. As the sole purchaser, the 
government would have to amortize the 
full cost of the item in question. On the 
other hand, if the government released 
an item from its secret status promptly 
and permitted export sales, the manufac- 
turer might be able to enlarge his volume 
of production substantially. With lower 
unit costs and larger margins of profit, 
he would be in a position to bid lower 



on subsequent government contracts. 
This was especially true with regard to 
aeronautical equipment, where the rate 
of change in design was particularly 
rapid. 

The procedures governing the release 
of aircraft and aircraft equipment were 
minutely specified, but the principles in- 
volved can be stated simply: military air- 
craft purchased by the United States or 
designed according to specifications of 
the military services were not to be re- 
leased for export until after the lapse of 
time, running up to as much as one year 
following the start of production. 13 In 
practice, this meant that no aircraft was 
released until several years after it left 
the design stage and had already long 
since been compromised by public dis- 
closure. Although the details of the pol- 
icy changed from time to time in the be- 
tween-war years, the principles involved 
remained constant into 1939. 

Curbs on the release of military air- 
craft until they were "approaching obso- 
lescence" 14 virtually destroyed all hope 
of large-scale export sales. The best po- 
tential customers are nations at war, and 
no warring nation willingly buys infe- 
rior arms. Thus, since the military serv- 
ices in the United States were anxious to 
build up the nation's capacity to produce 
aircraft in an emergency, they were un- 
der pressure to liberalize their release 
policy by authorizing the earliest possible 
sale and export of aircraft initially de- 
signed for the United States. 



13 See, for example, Release Policy for Aircraft 
and Aircraft Equipment, prepared by the Aero- 
nautical Board (Washington, 1938). 

14 General Arnold used the phrase in describing 
the existing release policy on the eve of the war. 
July Conference Proceedings, p. 26. 



198 



BUYING AIRCRAFT 



Since the release of military equipment 
from security classification had a definite 
influence on the volume of export, sales 
and hence on the development of pro- 
ductive capacity in the United States, 
the prevailing definition of "military se- 
crets" assumes no little significance. Some 
items of equipment are clearly identifi- 
able as military secrets. So long as the 
mechanism of the Norden bombsight was 
kept from the enemy, it gave the United 
States a decided advantage. With other 
items, airframes for example, the concept 
of military secrecy is less obvious. New 
principles are infrequent and advances 
are more in the nature of variant appli- 
cations, differences in engineering rather 
than in fundamentals. While "gadgets" 
may often constitute military secrets, 
most airframes lose this status almost as 
soon as they come out the factory door. 15 
On the other hand, by encouraging the 
export of military aircraft (lacking obvi- 
ously secret appliances) it was possible to 
strengthen the nation's productive capac- 
ity without added expense to the taxpay- 
ers. Moreover, by controlling the supply 
of spare parts the producing nation could 
even minimize the tactical importance of 
aircraft already sold. As one aircraft 
manufacturer suggested, the ability to 
supply means more than the available 
supply. 16 Thus, insistence upon a policy 
that tended to delay the date for releas- 
ing military aircraft for export well be- 
yond their first public appearance may 
have been highly detrimental to the na- 
tional interest since it undeniably cut 



15 See comments of Gen Arnold before Senate, 
Hearings on WD appropriation for 1941, May 2, 
1940, p. 96. 

18 See comments of Brig Gen George H. Brett and 
Glenn L. Martin, July Conference Proceedings, p. 26. 



export sales at a time when aircraft man- 
ufacturers desperately needed them. 17 

For years air arm officers had followed 
the easy course of classifying all recent 
and current aircraft as military secrets. 
Then, in 1939, they found themselves 
caught in a most awkward position when 
they began urging the utility of export- 
ing current models. Congressmen quite 
understandably asked, "Won't we be giv- 
ing away military secrets?" In the lexi- 
con of politics "military secrets" are 
sacrosanct no matter how expedient the 
justification for disclosure. 

On two counts, then— faith in the effi- 
cacy of neutrality legislation and the safe- 
guarding of military secrets, real or al- 
leged—national policy frowned upon the 
export of arms. Yet, despite these con- 
siderations and even while the official 
administration line remained one of ad- 
herence to strict neutrality, the President 
was whittling away at the letter of the 
law wherever executive discretion al- 
lowed. When, for example, French mili- 
tary representatives asked during 1938 
for permission to fly the Air Corps' P-36 
with an eye to possible purchase, the 
President readily gave his consent. 18 
Later in the same year he saw to it that 
the Export-Import Bank arranged a 
$25,000,000 military loan to China. The 
standing policy against credits for mili- 
tary purchases was easily evaded on the 
pretext that the loan would be spent on 
"essential" supplies other than arms and 
ammunition— a distinction that harked 



11 See comments of Martin, pp. ig-26, and J. T. 
Hartson, p. 21, as well as Jouett, p. 27, in July Con- 
ference Proceedings. 

18 Memo, Exec, OASW, for SGS, 21 Jun 38, SW 
files. 



FOREIGN POLICY, POLITICS, AND DEFENSE 



199 



back to the classic struggles of interna- 
tional jurists to define contraband. 19 

Although the President boldly seized 
the initiative in undermining the spirit 
of the neutrality statutes and in liberal- 
izing the War Department's release poli- 
cies whenever he felt he could safely do 
so, Air Corps officers did not at once fol- 
low his lead. General Westover, Chief 
of the Air Corps in July 1938, obeyed the 
regulations to the letter even though do- 
ing so meant forbidding the undeniably 
friendly Canadians so much as a peep at 
the XFM-i Bell fighter, which they had 
asked to see, presumably with the Presi- 
dent's encouragement. 20 Then abruptly 
there occurred one of those turns of fate, 
at once tragic and comic, that thrust the 
whole question before the public. 

In January 1939 a group of French 
officers on a purchasing mission visited 
the Douglas aircraft plant in California. 
There, with Air Corps permission, one 
of their number flew in a Douglas ex- 
perimental bomber with a company pilot. 
While demonstrating acrobatic maneu- 
vers at low altitude the bomber crashed. 
The French observer, Capt. Paul Che- 
midlin, survived the accident. As he was 
rushed to a hospital, company officials, 
well aware of the possible ramifications 
in any disclosure of the mission's inten- 
tions, attempted to disguise the observer's 
real identity by describing him to news- 
men as a company mechanic named 
Smithins. 21 The truth was soon out, and 



19 Edward R. Stettinius, Jr., Lend-Lease: Weapon 
for Victory (New York: The Macmillan Company, 

1944), p. 16. 

2 ° Memo, CofAC for CofS, 27 Jul 38, SW files. 

21 K. P. Wolfe to Gen Arnold, 28 Jan 39, AFCF 161 
French and Swedish Contracts. This file contains 
several items dealing with the affair. 



President Roosevelt found himself in the 
very midst of a political tempest. 

Isolationist Senator Bennett Champ 
Clark of Missouri regarded the Presi- 
dent's release to the French of a bomber 
designed for the United States as down- 
right "shocking." Senator Gerald Pren- 
tice Nye of North Dakota went even fur- 
ther. He felt that the permission granted 
to the French was nothing less than a 
"military alliance." In short order a 
Senate Committee was baying down the 
trail after detailed evidence on the Presi- 
dent's role in the whole affair. Although 
the Chief of Staff, General Craig, testified 
that military men had granted permission 
for the French flight only reluctantly and 
under pressure from the White House, it 
soon became apparent that no laws had 
been violated. 22 The release policies 
guiding the President were, in the final 
analysis, executive promulgations quite 
within the power of the President to dis- 
regard if he so desired. 

L'affaire Chemidlin may have been a 
blessing after all. It brought the Presi- 
dent's policy out into the open and re- 
vealed a stronger sentiment in favor of 
his policies than he himself apparently 
had expected. Press reaction to the in- 
cident, apart from rabidly isolationist 
journals, was generally favorable. 23 Aid 
for the British and French against the 
dictatorships was clearly regarded as a 
most expedient form of national self-in- 
terest. 



22 N ew York Times, January 29, 1939, 1:8. Craig's 
testimony was in executive session, thus in fairness it 
should be stated that his testimony is reported only 
as leaked by senators present. 

21 For specific comment to this effect, see Nation, 
February 11, 1939, p. 168. See also New York Times 
editorial, January 30, 1939, 12:1, and Arthur Krock's 
column, January 31, 1939, 20:5. 



200 



BUYING AIRCRAFT 



The net effect of the Chemidlin epi- 
sode was to establish a precedent permit- 
ting a more liberal release of equipment 
designed to Army and Navy specifications. 
Where previous foreign orders had been 
largely confined to training aircraft, ex- 
port sales now included bombers and 
fighters as well. In a matter of weeks 
after the Douglas crash, the trickle of 
orders from foreign purchasing missions 
turned into a torrent. During February 
1939 a British purchasing mission in- 
creased earlier orders to a total of 650 
aircraft, committing something over 
$25,000,000 for aircraft and facilities with 
North American and Lockheed. Several 
days later a French mission placed orders 
totaling 615 aircraft with Douglas, Cur- 
tiss, Martin, and North American, involv- 
ing more than $60,000,000. Correspond- 
ing orders for engines went to Pratt and 
Whitney and to Wright Aeronautical. 
In the months that followed French and 
British orders increased, and other na- 
tions followed suit, pressing aircraft 
builders for early deliveries. Canada, 
Australia, Belgium,- Norway, Sweden, 
and Iraq, to mention but a few, all placed 
contracts for varying numbers of military 
aircraft. Moreover, during the year no 
less than a million dollars' worth of air- 
craft went from the United States to the 
USSR. 2 * 

The importance of the rising volume 
of export orders to national defense would 



24 For a good summary of the early French and 
British orders, see Memo, Exec, OCAC, for SW, 
16 Jun 39, AFCF 161. See there also, R&R Proc Sec 
(Supply Div OCAC) to Gen Arnold, 4 Apr 39 and, 
Memo, Maj D. G. Lingie for Gen Arnold, a Sep 39, 
as well as New York Times, February 5, 37:4; Feb- 
ruary 15, 1:7; November 11, 3:8; December 2, 1939, 
3:1. 



be hard to overestimate. In some cases 
orders began to arrive just in time to 
save manufacturers from dismissing their 
trained cadres of production workers for 
want of business. 25 Coming as they did 
before Congress provided funds for the 
5,500 Air Corps expansion program, the 
big foreign orders helped make manu- 
facturers in the United States think in 
terms of large-scale production. When 
export orders continued to pile up on 
top of the volume of business created by 
the 5,500 program, crowding facilities 
and burdening the existing labor force, 
the double load encouraged expansion 
and forced manufacturers to train large 
numbers of additional employees. The 
need for meeting delivery deadlines while 
absorbing unskilled production workers 
led aircraft builders to undertake produc- 
tion tooling to an extent undreamed of 
in the past. 

Perhaps the greatest contribution of 
the foreign orders lay in their psychologi- 
cal value to the aircraft industry. The 
prospects of a sharply rising curve of ex- 
port sales seem to have put manufactur- 
ers in a mood to take bigger risks, to sink 
more capital in plant expansions and in 
costly tooling for mass-production assem- 
bly operations. Had the export orders 
contributed nothing more than the psy- 
chological preparation of the nation's 
aircraft builders, they would have been 
fully justified. 

Only one cloud hovered on the export 
horizon. By the terms of the 1937 neu- 
trality legislation, arms could not be 
shipped to nations officially declared bel- 
ligerents on the outbreak of war. What 
if Hitler turned one of the recurring in- 

25 Wilson, Slipstream, pp. 218-19. 



FOREIGN POLICY, POLITICS, AND DEFENSE 



201 



cidents into a casus belli and the foreign 
purchasers became forbidden belliger- 
ents? Editorial writers warned that the 
hundreds of aircraft on order might be- 
come undeliverable. Who, then, would 
pay for them? 28 This ominous threat, 
while not dissuading manufacturers from 
accepting orders from abroad, did induce 
them to drive hard bargains with foreign 
purchasers. 

The two major producers of engines 
for military aircraft, Pratt and Whitney 
and Wright Aeronautical, were reluctant 
in lggg to undertake vast additions to 
plants that might become liabilities if the 
neutrality legislation abruptly terminated 
foreign purchases. They agreed to ac- 
cept the staggeringly large engine orders 
proffered by the French and British on 
condition that the foreign purchasers 
agree to underwrite the cost of necessary 
plant expansion. Only the French agreed 
to accept these terms. They had little 
choice in the matter. Production in the 
nationalized aircraft plants of France had 
fallen disastrously far behind German 
output. Virtually the only alternative 
was to make up the deficit with purchases 
in the United States. After the fall of 
France the British took over all such com- 
mitments, and by the final accounting 
the two nations had invested more than 
$84,000,000 in the United States on en- 
gine plants alone. 27 Export orders clearly 
played an important role in gearing the 
manufacturers of military aircraft engines 
for the task of war. 



28 See, for example, S. Stubbleiield, "Washington 
Windsock," Aviation (October 1939), p. 53. 

2T Wilson, Slipstream, pp. 221-22; New York 
Times, November 4, 1939. 1:2; Stettinhis, Lend- 
Lease, p. 22. 



Despite the precautions taken by indi- 
vidual manufacturers to save themselves 
from sudden loss of markets on the out- 
break of war, the neutrality act did affect 
aircraft production seriously. During 
September and October 1939, while Con- 
gress debated whether or not to revoke 
the neutrality statutes, aircraft deliveries 
slumped. After reaching a production 
peak of 238 military aircraft per month 
during the summer, in September only 
51 units left the assembly lines. 28 Quite 
apart from the merits of the case on diplo- 
matic or legal grounds, the prosperity 
stemming from big production contracts 
offered convincing arguments for amend- 
ing the neutrality statutes. 28 Early in 
November 1939, Congress gave way and 
relaxed its earlier prohibitions sufficiently 
to permit the sale of arms to belligerents 
on a cash-and-carry basis. 

With the neutrality barriers out of the 
way, war orders from abroad increased 
rapidly. Where contracts for aircraft 
previously had stipulated hundreds, they 
now called for thousands. The experi- 
ence of a single manufacturer serves to 
illustrate the impact on the whole in- 
dustry. Douglas Aircraft reported just 
after Congress approved the cash-and- 
carry measure that there were 2,500 men 
standing in line outside the company 
office seeking employment. Already the 
Douglas labor force totaled 11,000, and 



28 Senate Hearings on WD appropriation for 1941, 
May 2, 1940, pp. 90-91. The production figures 
given here do not square with those in House Hear- 
ings on WD appropriation for 1941, March 7, ig4», 
P- 479- 

20 The threat of U.S. aircraft builders to erect 
plants in Canada outside the neutrality curbs may 
have helped persuade Congress to revoke the neu- 
trality measures. See Aviation (October 1939), p. 52, 
and New York Times, September 12, 1939, 7:5- 



202 



BUYING AIRCRAFT 



the firm had a backlog of $78,000,000 in 
unfilled orders — half of which were for 
export, 30 

In light of the fact that the Air 
Corps appropriation for new aircraft in 
fiscal year 1939 was only some $32,000,- 
000, the tremendous significance of for- 
eign orders as a stimulus to rearmament 
becomes apparent. From a backlog of air- 
craft industry orders totaling $630,000,- 
000, at the end of 1939, some $400,000,000 
was attributable to foreign purchasers. 31 
So long as these orders served as a goad 
to production, who could complain? But 
such sales posed problems for the Air 
Corps' own rearmament program. 

The rising volume of aircraft exports 
spelled success if by success one means 
fulfillment of the policy pursued by 
Congress— letting foreign orders build up 
aircraft production capacity in the United 
States at no expense to the nation's tax- 
payers. But success in this respect was 
tinctured with many complications and 
considerations quite apart from cost. 

Early in 1940 War Department spokes- 
men trooped to the Hill to present their 
presidentially approved estimates for fis- 
cal year 1941 . The formal estimate called 
for no more than 496 aircraft, just enough 
to meet the normal attrition rate and to 
sustain the 5,500 program at its planned 
strength. Although the number of air- 



30 New York Times, November 3, 1:6, and Novem- 
ber 9. !939> 9 : i-4- 

31 Congressional Record, November 1, 1939, page 
1367, gives a table o£ expenditures for new aircraft 
for 1920-40. See also Review of Methods Employed 
by the AAF . . . , Logistics Planning Div, Plans, 
ATSC, p. 04. The $400,000,000 in export orders in- 
volved more than 4,500 aircraft ordered from twelve 
of the approximately twenty major manufacturers. 
See Chief, Mat Div, to Aeronautical Board, 18 Jan 
40, AFCF 452.1 Sales Abroad. 



craft asked for in this estimate was no 
more than Congress had authorized in 
1939 and no more than had been antici- 
pated from the beginning of the expan- 
sion program, the appropriation hearings 
gave ample evidence that the congress- 
men were more than willing to find ways 
of reducing the cost of rearmament. 32 
The officers who defended the estimate 
for the War Department were fully 
aware of this situation and recognized 
the necessity of contriving tactics to 
meet it. 33 

Shortly before presenting their esti- 
mates, the War Department officials had 
agreed, with some urging from the Presi- 
dent, to permit manufacturers with gov- 
ernment contracts for military aircraft to 
defer deliveries to the Air Corps in favor 
of export sales. 34 A number of factors 
lay behind this decision. To begin with, 
the President had favored the release of 
current models of military aircraft as a 
matter of foreign policy, insuring sur- 
vival of the French and British, which 
in turn would, he hoped, keep the war 
from the New World. But as soon as air- 
craft manufacturers were allowed to ex- 
port current military models a new di- 
lemma appeared. Which customer should 
take priority in delivery? 

Manufacturers were in a position to fa- 
vor deliveries to foreign countries rather 
than to the Air Corps. Since the foreign 
purchasers were desperate, they were will- 



33 House Hearings on WD appropriation for 1941, 
February-March 1940, passim. 

33 See, for example, General Marshall's fear of an 
economy wave, Hearings of Senate Military Affairs 
Com on S Res 244, 76th Cong, 3d sess, March 28, 
1940, p. 15. 

34 House Hearings on WD appropriation lor 1941, 
February-March 1940, passim. 



FOREIGN POLICY, POLITICS, AND DEFENSE 



203 



ing to pay premium prices. With pre- 
mium payments from foreign sales, man- 
ufacturers could afford to channel all 
their output to the export market and 
use a small part of the ample profit mar- 
gin thus derived to pay the penalty for 
delayed deliveries to the Air Corps as 
specified in the government's liquidated 
damage clauses. Air Corps officers came 
to the realization that whether they liked 
it or not they might find themselves in 
competition with foreign purchasers. 35 

On the other hand, there were some 
decided advantages to be gained from the 
situation. 30 With the coming of war the 
pace of technical development and design 
changes in the field of aviation acceler- 
ated sharply throughout Europe. Each 
nation sought feverishly to turn out air- 
craft of superior performance. As a con- 
sequence the rate of change became so 
rapid that in the United States aircraft 
ordered by the government at the begin- 
ning of the expansion program threat- 
ened to be obsolete by the time they were 
delivered months later. To insist upon 
delivery on schedule of all aircraft due 
the Air Corps might turn out to be a guar- 
antee of acquiring obsolete equipment. 
By deferring deliveries and allowing for- 
eign purchasers to buy directly off the 
end of the production line, the Air Corps 
could take later delivery of improved 
models. 



35 Ibid., 42, pp. 476-78. 

36 For an extended survey of the pros and cons of 
export sales, see Rpt of Meeting in OCS, 19 Mar 40, 
AFCF 452.1 Sales Abroad. See also, Gen George C. 
Marshall and Gen Arnold, Statement of Policy, for 
President, 21 Mar 40, AC Project Reds (Lyon 
Papers), 59-108F, and testimony of SW Woodring 
before Senate Military Affairs Com, Hearings on 
S Res 544, March 18, 1940. 



By granting belligerent nations the 
output of current production, the Air 
Corps could secure realistic tests for its 
equipment under actual combat condi- 
tions without the loss of a single man. 
And, as experience revealed, the latest 
Air Corps equipment proved deficient in 
armor, armament, and a number of other 
details such as self-sealing fuel tanks. By 
taking delivery at a later date, the Air 
Corps would not only secure improved 
equipment but also lower prices since 
sales abroad would tend to absorb some 
of the cost of the modifications found 
necessary. 

Undoubtedly there was a very real 
danger in buying obsolete equipment for 
the air arm. And upon this ground War 
Department spokesmen could present 
valid arguments justifying the delayed 
deliveries to the Air Corps. 37 They ap- 
parently felt, however, that the argument 
of obsolescence would be insufficient to 
persuade the economy-minded congress- 
man with an eye to the on-coming elec- 
tions. To meet this difficulty the War 
Department representatives offered fur- 
ther bait. 

Foreign sales of military aircraft, the 
Chief of Staff told Congress, built up the 
productive capacity of the industry. The 
original 5,500 program called for 3,300 
active and 2,200 reserve aircraft. But the 
ratio of reserve to active units— 2,200 to 
3,300— was premised upon the estimated 



37 General Marshall noted later that the War De- 
partment "could not afford to do anything else" but 
defer deliveries to export channels, so serious was 
the problem of obsolescence. Senate Hearings on 
WD appropriation for 1941, May \, 1940, p. 64. 
General Arnold, when prodded by Senator Henry 
Cabot Lodge, Jr., also admitted that obsolescence 
had become a serious problem since the outbreak of 
war in Europe. Ibid., pp. 73, 105. 



204 



BUYING AIRCRAFT 



productive capacity of the industry when 
the expansion program was first formu- 
lated. Export sales, by stimulating plant 
expansion, increased productive capacity 
and reduced the need for a large reserve. 
On this basis, both General Marshall and 
General Arnold offered to cut the origi- 
nal estimate of 496 new aircraft for fiscal 
year 1941 to a total of 166 items. 38 This 
reduction, volunteered by the War De- 
partment, appealed to the congressmen; 
it represented a possible saving of some 
$27,000,000 in the budget. 39 Unfortu- 
nately, in suggesting this economy, the 
military leaders opened Pandora's box. 

Why, reasoned the Appropriations 
Committee, should they stop at 166 air- 
craft? If the entire 496 aircraft in the 
estimate were to fill the reserve and if ex- 
port sales obviated the need for a reserve, 
why buy any of the 496 aircraft? Follow- 
ing this line of reasoning, the committee 
reported out a bill providing only 57 new 
aircraft for fiscal year 1941 and the House 
promptly passed the measure. 40 While 
rushing to the Hill to beg the Senate to 
restore this cut, the Chief of Staff may 
have reflected somewhat ruefully on the 
impropriety of letting the camel get his 
nose under the tent. 

Undoubtedly there was a good deal of 
dismay, if not irritation, in the War De- 
partment when responsible officers there 
saw how the congressmen had seized the 
initiative, using the Department's own 



38 Ibid, , p. si. See also, Senate Military Affairs 
Com Hearings on S Res 244, March 28, 1940, p. 12. 

39 Hearings on S Res 244, March 28, 1940, p. 10. 

40 H.R. 9209, WD appropriation for 1941, 76th 
Cong, 3d sess. See H Rpt 1912, April 3, 1940. See 
also, remarks of Representative Snyder in Cong Red, 
April 3, 1940, 3932ft. 



arguments. 41 This rather unexpected 
reversal must have been disconcerting in 
itself; worse yet, it did not mark the end 
of the difficulty. The tactic of tying ex- 
port sales to a reduced appropriation in 
an effort to woo Congress with an econ- 
omy package held other dangers. 

No matter how justifiable the export 
of current models of military aircraft 
might be as foreign policy, such sales 
posed serious problems to those responsi- 
ble for national defense. Insofar as di- 
versions of equipment to foreign coun- 
tries delayed delivery to the Air Corps, 
they threatened to delay the expansion 
program. Ostensibly, the units deferred 
were destined for a reserve status, but 
any acceleration in the training program 
would immediately create a need for 
some of the reserves. 42 True, by not de- 
ferring deliveries the Air Corps would 
get obsolescent aircraft, but for training 
purposes even obsolete aircraft would be 
better than none at all. Furthermore, 
export orders tended to drive up costs 
since in their desperation the foreign pur- 
chasers were willing to negotiate contracts 
with wider profit margins to ensure speed 
in production. Manufacturers receiving 



41 Both General Marshall and General Arnold de- 
scribed the 496 aircraft in the estimate as "replace- 
ments," items falling in the reserve portion of the 
5,500 program, thus providing a handle for the com- 
mitteemen to eliminate most of the aircraft as they 
did. House Hearings on WD appropriation for 1941, 
February 23, 1940, p. si, and March 8, 1940, p. 519. 

42 Actually, as Generals Marshall and Arnold sub- 
sequently admitted, the reserve was not a reserve 
after all. It did not provide any reserve in heavy 
bombers, and some units were designated reserve 
"only because at the time the appropriation was 
made they were not yet out of the experimental stage 
and air arm officers did not wish to buy 'paper' air- 
craft." Senate Hearings on WD appropriation for 
1941, April 30, 1940, p. 38, and May 2, 1940, pp. 
115-22. 



FOREIGN POLICY, POLITICS, AND DEFENSE 



205 



these foreign contracts were then in a po- 
sition to bid lavishly for the output of 
vendors and suppliers, and this in turn 
tended to drive prices higher for the Air 
Corps. 43 

The President did not make the policy 
of favoring exports easy to take. He con- 
tinued to exert pressure in favor of for- 
eign purchasers until the Air Corps found 
itself hard put to carry out the successive 
phases of the expansion program. By the 
summer of 1940, about 70 percent of the 
military engines delivered by the two 
leading engine manufacturers went to 
foreign purchasers. 44 Worse yet, export 
sales actually threatened to wreck the air 
arms' all-important heavy bomber pro- 
gram. 45 

The discomfiture of Air Corps lead- 
ers was acute. They were caught in a 
crossfire of executive will and military 
necessity. The Chief of the Air Corps 
repeatedly protested, within the Depart- 
ment, that an excessive release of aircraft 
for export could cripple the air arm seri- 
ously, although in public he continued 
to accept the President's leadership with- 
out qualification. When rumors of his 
private protests reached the newspapers 
he disavowed them— quite properly— as 
inaccurate. 46 Yet, ironically enough, 
when some junior officers, reflecting his 
own irritation, berated the President's 



43 Testimony of Admiral J. H. Towers, House 
Healings on Navy Dept appropriation for 1941, 
January 8, 1940, p. 488. 

44 Mat Planning Sec, Mat Div, Chart: Proportion 
of Accepted Deliveries of Aircraft Engines by Cus- 
tomer . . . , Jan-Aug 40, 26 Sep 40, AC Project Reds 
(Lyon Papers), 59-10 F. 

45 Cof AC to ASW thru CofS, 14 Jim 40, and Memo, 
CofAC for CofS, 17 Sep 40, AFCF 452.1 Sales Abroad. 

48 CofAC to Senator Sheppard, 4 Apr 40, AHO 
Plans Div 145.93-263. 



policy of favoring aid to the Allies over 
rearming the Air Corps, General Arnold 
slapped them down pointedly. Criticism 
of the President's policy, he declared, was 
a "flagrant breach of discipline." 47 

To use a phrase more nautical than 
aeronautical, the Air Corps was caught 
in a bight. The whole matter of exploit- 
ing the export trade in aircraft as an ele- 
ment of national defense clearly had not 
been thought out to its hither limits be- 
fore the crisis arrived. In a sense this 
was a serious shortcoming in the vital 
field of mobilization planning. 

Aircraft Exports and 
Mobilization Planning 

During August 1939, on the eve of 
World War II, General Arnold began to 
have serious doubts concerning the value 
of the existing Air Corps mobilization 
plans. Only a few days before the Ger- 
man invasion of Poland he ordered a re- 
study of the whole problem— clearly in 
anticipation of a sweeping revision. 48 

The organization for mobilization 
planning that ultimately would have to 
comply with General Arnold's request 
was at best a blunt instrument. 49 More- 
over, just as the planners entered upon 
the most difficult tasks of the limited 
emergency, the already inadequate or- 
ganization received a crippling blow. 



« CofAC to CGGHQAF, i Oct 40, AHO Plans Div 
i45-9i-a46. 

48 Unsigned Memo for Brig Gen B. K. Yount, 18 
Aug 39, AFCF 381A War Plans; Notes, Div Chiefs' 
Staff Meetings, 1939-40, AFCF 337 Special, as well 
as Memo, Col Echols for Gen Arnold, 23 Aug 39, 
AFCF 452.1 Aircraft, Gen. See also, 1st Ind CofAC 
to ASW, Apr 39, on basic, Planning Br (OASW) to 
CofAC, 27 M ar 39, W FCF 381 Mobilization. 

*» See above ra^WTI 



206 



BUYING AIRCRAFT 



Foreign orders and the outbreak of war 
in Europe forced the Chief of the Air 
Corps to give more attention to mobili- 
zation planning at the headquarters in 
Washington. Congressional queries and 
the need for detailed information on the 
part of all the various agencies of the 
War Department led to a decision to 
transfer a part of the Industrial Planning 
Section at Wright Field to Washington, 
where it was to serve in a liaison capacity. 
This transfer of officers in September 1939 
reduced the already undermanned plan- 
ning staff at Wright Field by one-third. 
What is more, the cut came at the very 
moment when the workload at Wright 
Field began to increase enormously. To 
make matters worse, the officers sent to 
Washington were soon afterwards lured 
off into other duties. The planning func- 
tion lost ground on both fronts. 50 

The whole industrial planning opera- 
tion began to fall behind the rapidly 
changing pace of events. One rather 
glaring example of this should suffice to 
illustrate the tendency. Among other 
duties, the mobilization planners were 
responsible for working out the details 
for lining up the aircraft industry to meet 
the requirements of the Protective Mo- 
bilization Plan (PMP) of 1939. 51 Since 
the Air Corps possessed no currently ap- 
proved Tables of Organization and Basic 
Allowance, all the detailed work on PMP 
had either to wait or to be evolved from 
obsolete data. Even if the necessary ta- 



50 AAF Hist Study 10, p. 58. Unsigned Memo, 24 
Apr 40, sub: Major Time Consuming Projects of 
Industrial Planning Sec, and Memo, Maj A. W. Mar- 
riner, Asst Tech Exec for Chief, Mat Div, 4 May 40, 
WFCF 381. 

51 For air arm aspects of PMP 1939, see AHO Plans 
Div 1 45 -93-2 49- 



bles had been available, however, they 
would not have solved all problems. The 
air component of PMP was geared to the 
authorization of 1936 totaling 2,320 air- 
craft. By mid-1939 this ceiling had been 
raised to 6,ooo and procurement of 5,500 
units was under way. Air arm officers 
suggested to the General Staff that fur- 
ther work on a PMP premised upon 2,320 
aircraft was, to say the very least, "open 
to question." 52 

The hint had very little effect. Dur- 
ing May 1940, a General Staff query 
blandly asked for further information on 
PMP, including the desirability of ad- 
ditional observation balloons. General 
Arnold pointed out that this sort of plan- 
ning had no real value since, in terms of 
PMP, the Air Corps was already beyond 
the 2,320 limit— was in fact already mo- 
bilized. 53 But the mobilization planners 
at Wright Field lagged far behind Gen- 
eral Arnold in their conception of the 
problem; they continued to plod along 
with the details of PMP and its augmen- 
tations. As late as August 1940, after the 
fall of France had entirely altered the sit- 
uation, a furious officer was still trying to 
shut off the "asinine" work of the mobi- 
lization planners at Wright Field who 
lumbered along, several laps behind real- 
ity, working out PMP. 54 

In blunt truth, the industrial planners 
at Wright Field went on shoeing dead 
horses from September 1939 until well 



52 Dir, Planning Br, OASW, to CofAC, 27 Mar 39, 
and draft by Plans Div, OCAC, to TAG, 9 Jun 39, 
AHO Plans Div 145.93-182. 

53 TAG to CofAC, 8 May 40, and 1st Ind, CofAC 
to TAG, 6 Aug- 40, AHO Plans 145.93-250. 

54 IOM, Maj B. E. Meyers to Tech Exec, Mat Div, 
24 Aug 40, Air AC Project Reds {Lyon Papers), 
59-H- 



FOREIGN POLICY, POLITICS, AND DEFENSE 



207 



into the summer of 1940. Their funda- 
mental shortcoming, it appears, was a 
failure in conception; they did not seem 
to realize that the air arm's expansion 
program of 1939 was really phase one of 
the mobilization for war. Their think- 
ing was far too rigid to fit actualities that 
did not mesh perfectly with their precon- 
ceived notions of how war would come; 
the M-day for which they were planning 
had already passed. 

Even more serious than the inability 
of the Wright Field planners to antici- 
pate a creeping M-day was their failure 
to foresee the contingencies that might 
arise from foreign orders for aircraft in 
wartime. Here again they ignored the 
experience of World War I with unfor- 
tunate consequence. When the Presi- 
dent and the Congress decided to utilize 
French and British orders for aircraft as 
an integral aspect of the nation's defense, 
the mobilization planners at Wright Field 
had no clear path to follow. Perforce, 
they had to grope and blunder in solving 
the problems raised by the policy. 

The contingencies stemming from the 
precipitous rise in export orders for mili- 
tary aircraft took any number of forms. 
For example, air arm contracts in force 
when the crisis arrived contained no 
provisions preventing foreign purchasers 
from securing priority on deliveries by 
paying the liquidated damage penalties 
imposed by the Air Corps for delays. 
Had air arm officers anticipated the situ- 
ation their contracts might have been 
better drawn. 

Similarly, the record of the first few 
months of war makes it quite clear that 
Air Corps officers were taken off guard 
by the extremely high rate of design 
change in military aircraft. As Generals 



Arnold and Marshall both admitted, the 
release of military aircraft from the 
United States to Europe was not only 
desirable but essential if this nation was 
to avoid being left with obsolete equip- 
ment. Realistic experience with mili- 
tary equipment (without loss of lives to 
the Air Corps) was a useful and neces- 
sary quid pro quo for the release of re- 
cent production models to foreign users. 
Clearly the relationship between the "re- 
lease policy" or regulations as to military 
secrets on the one hand and deferred de- 
livery to foreign purchasers on the other 
had not been thoroughly thought out 
before the war came. 

The whole point and purpose of peace- 
time planning is to avoid hasty improvi- 
sation in time of crisis. The mobilization 
planning of the air arm was not only 
faulty in conception but inadequate in 
execution. The failure was not alone 
that of the mobilization planners at 
Wright Field who did the detail work. 
It was a failure of higher command as 
well. The congressional decision to ac- 
cept export orders as a vital aspect of na- 
tional defense required of the Air Corps 
a whole series of corollary responses and 
adjustments that only the upper echelons 
of leadership could make. Since these 
decisions were not made in advance, im- 
provisation in the crisis was unavoidable. 
The cost— in confusion and delay— is a 
matter of record. 

During the dreadful days of May and 
June 1940 when so many illusions were 
shattered, air arm officers woke up to the 
realization that the policy of letting for- 
eign orders mobilize the aircraft industry, 
the policy they had been led to accept 
and approve, was now turning out badly. 
On 10 May the Germans invaded neutral 



208 



BUYING AIRCRAFT 



Holland and Belgium. Twenty days 
later British troops faced disaster at Dun- 
kerque. On 10 June Mussolini declared 
war on France. A week later the French 
were begging an armistice. And in this 
crisis the Air Corps was inadequately 



armed. Once again air arm officers were 
learning from painful experience, as an 
earlier generation had learned in the 
months leading up to April 1917, that 
politics, foreign policy, and mobilization 
planning cannot be separated. 



CHAPTER X 



Requirements 



When President Roosevelt went before 
Congress on 16 May 1940 with his dra- 
matic appeal for arms, he asked among 
other things for 50,000 airplanes. How 
did he arrive at the number 50,000? One 
version is that the President was disap- 
pointed at the lack of imagination dis- 
played by military leaders when asked to 
state their maximum needs, so he plucked 
a number— 25,000 —from the air, possibly 
with an eye to World War I experience. 
But when he asked the British produc- 
tion chief, Lord Beaverbrook, for an 
opinion, that worthy is alleged to have 
replied, "Why be a piker; 100,000 makes 
better headlines." So the President split 
the difference and asked for 50,000 air- 
craft. 1 

On the other hand, in his memoirs, 
Secretary of State Cordell Hull recalls a 
conversation with the President during 
May 1940, as the French Republic was 
about to collapse, when the President 
spoke of merely doubling the existing 
military appropriation. Hull urged him 
to go far beyond that and "aim for a pro- 
duction of 50,000 planes a year." The 
President, Mr. Hull tells us, was speech- 
less at the size of this figure, an eightfold 
increase over existing programs. 2 

1 Wilson, Slipstream, p. 233. 

2 Cordell Hull, The Memoirs of Cordell Hull, 2 
vols. (New York: The Macmillan Company, 1948), 
p. 766. 



Conceding the accuracy of Mr. Hull's 
memory, his account of the origin of the 
50,000 figure is no more bizarre than the 
Beaverbrook anecdote. Here, too, the 
figure is a round number plucked from 
the air, casually and quite unscientifi- 
cally. How then, one may well ask again, 
was the 50,000 figure actually derived? 
Before seeking an explicit answer to this 
question it may be useful to digress and 
explore the general question of require- 
ments as well as the several factors condi- 
tioning the computation of requirements. 

An Essay on Requirements 

The computation of requirements is a 
central problem in any study of military 
procurement. The procurement process 
cannot begin until at least three essen- 
tials are determined: how much of what 
and when— quantity, quality, and sched- 
ule. This applies not only to aircraft, 
but to all related items as well, for main- 
tenance tools, field servicing equipment, 
and special facilities for ground crews are 
just as vital as the aircraft themselves. 
When there is no aqua system, no high- 
speed pump, and no tank truck for re- 
fueling, ground crews must resort to 
bucket brigades. Under such circum- 
stances refueling a heavy bomber takes 
hours rather than minutes, and the air- 
craft on hand are "tactically available" 



210 



BUYING AIRCRAFT 



fewer hours per day. Bitter experience in 
the early months of World War II made 
the truth of this only too evident; acces- 
sories proved to be every bit as important 
as airframes and engines. An aircraft 
without guns or without an oxygen sys- 
tem was hardly better than no aircraft at 
all. When landing gear production- 
wheel, strut, or tire— lagged, so did air 
power. The discussion that follows is 
cast largely in terms of airframes or en- 
gines in order to simplify the analysis, 
not to minimize the importance of spares, 
maintenance equipment, and accessories. 
Within the framework of this arbitrary 
limitation, it should be possible to review 
the parameters— the several variable fac- 
tors—that enter into the formulation of 
requirements for the nation's air power; 
and surely no single factor is more im- 
portant to the computation of require- 
ments for air power than a clear defini- 
tion of the meaning of air power itself: 
the doctrine or agreed-upon mission of 
the air weapon. 

Mission Unknown 

Although it is patently impossible to 
formulate an accurate statement of re- 
quirements without first defining the 
mission of the weapons to be procured, 
the fact remains that as late as 1939 the 
doctrine or accepted mission of the 
Army's air arm remained in uncertain 
flux. In the early 1930 s the Chief of 
Air Corps flatly asserted that the air arm 
had no officially defined wartime role. 3 
Such neglect of doctrine suited the era 
when hopeful statesmen sought a formula 



3 Testimony of Gen Foulois, House Hearings on 
WD appropriation for 1933, January 5, 1932, p. 1014. 



for world peace at Geneva. All their at- 
tempts failed but not from want of co- 
operation by the War Department. In 
1933 the President and the Secretary of 
War had even been willing to abolish 
bombardment aviation as a contribution 
to disarmament. 4 Little wonder that air 
power enthusiasts in the Air Corps mis- 
trusted the War Department. The long 
struggle of the air arm to win General 
Staff approval of its heavy bomber doc- 
trine of strategic air power is well known. 
There is no need to retrace those steps 
here save to observe that by 1938 a num- 
ber of studies were made within Air 
Corps circles spelling out the strategic 
role of air power in considerable detail, 
though the studies by no means repre- 
sented official doctrine approved by the 
General Staff. 8 Thus down to the out- 
break of war in 1939 there was no real 
agreement between the Air Corps and 
the General Staff on the mission of the 
aerial weapon. 6 

When the Air Corps rearmament pro- 
gram began to take shape after the 
crucial White House conference in No- 
vember 1938, the lack of an approved 



4 Secretary of War Annual Report, 1933, pp. 48-49. 

3 See, for example, AC Board Study 44, Air Corps 
Mission Under the Monroe Doctrine, 17 Oct 38, 
AHO files; and student com rpt, ACTS, A Study of 
the Air Defense of the Western Hemisphere, 12 May 
39, AHO Plans Div 145.93-141. 

6 TAG to CofAC, 23 Mar 39, AFCF 381.A War 
Plans. For examples of conflicting views of General 
Staff and Air Corps, see Memo, G-4 for Gen Mar- 
shall, 5 Apr 39, AGO Reds, G-4 27277-19; Memo, 
OASW for Gen Marshall, 2 Mar 39, AGO Reds, 
WPD-OPD 3807-32-40. Of particular interest is 
the Air Corps effort to obtain more freedom in 
defining military characteristics for aircraft to be 
procured. See CofAC to TAG, 10 Jun 39, WFCF 
452.1 Military Characteristics; AC Policy 181, 10 
Jul 39, Digest of AC Policies, AF Doc Br. 



REQUIREMENTS 



211 



statement of mission for the air arm led 
to trouble. Congress, following the pro- 
posals of the administration, launched a 
program calling for 5,500 aircraft, but 
was this expansion actually geared to the 
needs of the Air Corps? Procurement 
had scarcely begun when the Secretary of 
the General Staff suggested that the num- 
ber of aircraft authorized by Congress had 
been "arrived at hurriedly" and "with- 
out a sufficiently thorough estimate of the 
situation. ..." 7 

The outbreak of war in Europe served 
only to emphasize the need for an im- 
proved foundation of doctrine in formu- 
lating aircraft requirements. The blitz- 
krieg in Poland must have led to some 
sobering second thoughts about air 
power, for by the end of October 1939, 
a new harmony seemed to mark the rela- 
tions of air and ground staff officers. "For 
the first time," one air arm officer re- 
ported after a conference with represen- 
tatives of the War Plans Division, "we 
are approaching the problem of air re- 
quirements in a logical way. We are 
analyzing the problem first in order to 
determine the character of the tools 
needed." 8 In short, on the testimony of 
participants on both sides of the issue, 
their inability to reach decisions on doc- 
trine had left the formulation of require- 
ments unsettled until the crisis of war 
itself. The War Department had been 
forced to begin buying its weapons be- 



T Memo, SGS for WPD, so Oct 39, AGO Reds, 
WPD-OPD 3807-41. 

* Memo, Capt H. S. Hansell for Col I. C. Eaker, 
31 Oct 39, AFCF 337.1 Conference. The co-opera- 
tive attitude expressed here appears to have been 
developed while working out the details of the 
Army's new strategic plan based on the joint Rain- 
bow 1 plan approved in August 1939. 



fore deciding what weapons it wanted. 9 
The failure of officers within the War 
Department to resolve their differing 
views on air power was not the only way 
in which doctrine affected the calculation 
of requirements. Between the Army and 
Navy the role of air power was subject 
to still sharper dispute —and this too was 
unresolved when war broke out. 

The Army and the Navy 
Agree To Disagree 

Early in the nineteen thirties Chief of 
Staff Douglas MacArthur told some con- 
gressmen that the Army-Navy dispute 
over air power and coastal defense was 
"completely and absolutely settled." 10 
He was, it would seem, a bit optimistic, 
for not long afterward the Aeronautical 
Board, the appropriate agency for resolv- 
ing such joint conflicts between the Army 
and Navy, reported that its members were 
unable to reconcile their conflicting views 
and arrive at a mutually acceptable state- 
ment on the proper mission of Army air 
power. 11 

The dispute of the Army and Navy 
over air power was by no means academic. 
It was often expressed in seemingly triv- 
ial terms— for example, minor overlaps in 
functions such as the operation of patrol 
planes— but behind the facade of details 
lay a fundamental struggle for power. 
Navy spokesmen held that "sea opera- 
tions" were "inherently a function of the 



9 See complaints of ASW Johnson on this point, 
Aerodigest (January 1939), p. 51. 

10 Testimony on H.R. 9920, May 25, 1932, quoted in 
Craven and Cate, eds., Plans and Early Operations, 
p. 62. 

11 Aeronautical Board Case 59, 27 Apr 34, AGO 
Reds, WPD-OPD 888-90-91. 



212 



BUYING AIRCRAFT 



Navy . . . whether . . . carried out by sur- 
face ships, subsurface ships, or aircraft." 
Army representatives with little confi- 
dence in the future of strategic bombers 
might be willing to concede this much, 
but how could they accept the Navy con- 
tention that "money spent on our Army 
could, with more profit toward guarding 
our continental coastline, be spent in 
augmenting our naval strength. . . ."? 12 
With so much in the way of pay, promo- 
tion, the hope of command, and the whole 
question of career tied up in the matter, 
it was difficult for either Army or Navy 
officers to take an utterly detached view. 

Unable to reach any fundamental 
agreement on doctrine, Army and Navy 
officials resorted to an old formula: they 
would agree to disagree. All controver- 
sial discussions of Army-Navy operations, 
warned a General Staff officer, should be 
studiously avoided. 13 This was the es- 
sence of the "solution": solve the prob- 
lem by virtually ignoring it. High-rank- 
ing officers contrived an accord only by 
defining the respective missions of the 
services in very general terms that 
avoided exploring the areas of overlap 
too closely, 14 and once this "agreement" 
was drawn, they fended off every effort 



12 Rear Adm J. K. Taussig to Clark Howell, 6 Dec 
34, AGO Reds, WPD-OPD 888-gz. 

« Memo, G-i for WPD, 9 Apr 35, AGO Reds, 
WPD-OPD 3774-13. 

14 WPD draft, Employment of Army Aviation in 
Coast Defense, 16 Aug 34, AGO Reds, WPD-OPD 
3774-13. Something of the precarious character of 
the accord is suggested by the following buckslip 
from Kilbourne to Drum covering the draft ". . . we'll 
never silence the junior officers without some very 
drastic discipline." See also Memo, WPD for CofS, 
13 Jan 40, which mentions the Army-Navy joint 
action accord, saying this "admittedly does not meet 
the main issue." WPD 888-103. 



to reopen the question. 15 Air power ad- 
vocates within the Army who urged re- 
consideration in light of the rapidly in- 
creasing potential of long-range bombers 
were repeatedly silenced with the argu- 
ment that the precarious Army-Navy ac- 
cord must not be upset. The admittedly 
faulty definitions of respective missions, 
"arrived at after years of acrimonious and 
injurious controversy" had best be left 
undisturbed. 16 

The consequences of the Army-Navy 
failure to work out a solution as to their 
respective overwater missions were obvi- 
ous. With one whole potential area of 
air arm activity left in uncertainty, it was 
next to impossible to compute quantita- 
tive and qualitative requirements. High- 
ly suggestive evidence of the gap separat- 
ing Army and Navy thinking and hence 
requirements is to be found in a dispatch 
of the War Department's Hawaiian com- 
mander written soon after the outbreak 
of war in Europe. He reported, in secret 
and with evident surprise, that his recent 
conversations with naval officers in the 
islands revealed "an apparent acceptance 
of the idea that the Navy might sometime 
call upon the Army Air Corps in this area 
for assistance." If the Air Corps hoped 
to co-operate effectively, the Army com- 
mander pointed out, no time should be 
lost in establishing flight strips on the 
islands within bomber range of Hawaii. 
Thus, when Hitler was rolling through 
Poland, the Army was just beginning to 

13 See, for example, Memo, DCofS for WPD, 13 
Oct 37, and related papers, AGO Reds WPD-OPD 
888-100-102; Memo, WPD for CofS, 22 Dec 38, in 
WPD 888-03. 

18 Memo, WPD for CofS, 22 Dec 38, AGO Reds, 
WPD-OPD 888-103. See also, Memo, Chief, Plans, 
OCAC, for CofAC, 5 Mar 38, AFCF 321.94 Organi- 
zation; Arnold, Global Mission, pp. 1 76—77. 



REQUIREMENTS 



213 



think in terms of such far-flung bases as 
Christmas Island, Midway, and the like, 17 
which had to be considered in any plan 
of aerial defense for the Hawaiian Islands. 

On two counts then— uncertainty as to 
its role within the Army and uncertainty 
vis a vis the Navy— the air arm faced im- 
ponderables when attempting to tally its 
needs. Unfortunately, these were not the 
only variables involved. There were also 
political factors that had to be taken into 
account. 

The Political Factor in 
Requirements 

On the first of July 1939 President 
Roosevelt issued a military order. In his 
capacity as Commander in Chief, he 
placed the Joint Army and Navy Board, 
the Aeronautical Board, the Joint Econ- 
omy Board, and the Munitions Board di- 
rectly under his leadership in the Execu- 
tive Office. 18 The shift involved some 
adroit political maneuvering that need 
not concern us here, but it is of signifi- 
cance insofar as it clearly indicated the 
President's intention to rule the military 
arm as well as reign. 

Since the services would naturally fol- 
low the President's lead, military officials 
accepted an obligation to back up his 
leadership with adequate steps in sup- 
port. The evolution of the nation's for- 
eign policy offers a case in point. Here 
the President was a leader; he inched 
along cautiously, making one change at 
a time, seeking always to be sure the pub- 
lic substantially supported him. Thus, 

« Maj Gen C. D. Herron to TAG, 5 Oct 3g, and 2d 
Ind, OCAC to TAG, AFCF 381 War Plans. 

18 Military Older 129, by FDR, July 1, 1939, Fed- 
eral Register, vol. IV (July 7, 1939), p. 2786. 



over the months and years before the war, 
the nation's foreign policy was modified 
decidedly, albeit gradually, and as a con- 
sequence the nation's military obliga- 
tions altered too. Each new Presidential 
promulgation and pronunciamento in the 
field of foreign relations brought with it 
a corresponding need for at least a review 
and in some cases a revision of national 
military strength. 

During 1937 planning officers in the 
War Department regarded the Army's 
mission as the defense of the United 
States and its territories. Then, early in 

1938, President Roosevelt warned Con- 
gress that increases in armament were 
necessary to keep "any potential enemy 
many hundred miles" from the coasts. 19 
Clearly the concept of continental defense 
was expanding. Six months later, speak- 
ing at Kingston, Ontario, the President 
assured his listeners that the United 
States would not stand idle if Canada 
were threatened. Here, by implication 
at least, was a further extension of mili- 
tary obligation. In November 1938, at 
the time of the White House conference 
at which the initial target of 10,000 air- 
craft was suggested, the President di- 
rected his military chiefs to prepare plans 
to meet any attack on the Western Hemi- 
sphere, from pole to pole. When Con- 
gress convened soon thereafter in January 

1939, he announced this pattern of hemi- 
sphere defense publicly. 20 

Each step in the evolution of foreign 
policy implied a response in military 
terms— a revision of strategic thinking, 



19 Cong Red, January 28, 1938, p. 1216. 

30 Stetson Conn and Byron Fairchild, The Frame- 
work of Hemisphere Defense, UNITED STATES 
ARMY IN WORLD WAR II (Washington, i960), 
ch. I. See also Cong Red, January 4, 1939, p. 74. 



214 



BUYING AIRCRAFT 



new areas to defend, new bases to plan 
or prepare, a revision in the capabilities 
and number of the weapons required. 
A few words from the President and the 
existing heavy bomber might no longer 
be adequate. New specifications, new 
statements of military characteristics, and 
so on would then have to be devised to 
suit the new situation. 21 

The influence of Executive discretion 
on military requirements was by no means 
limited to the extension or contraction 
of defense spheres. The President's lead- 
ership in extending aid in the form of 
aircraft to friendly powers was another 
aspect of his ability to shape military re- 
quirements. Each time the President or 
his agents agreed to deliver military air- 
craft to British, Soviet, Chinese, or other 
forces, the sum of military requirements 
in the United States varied accordingly. 22 

War Department staff officers who tried 
to compute aircraft requirements thus 
faced a dismaying number of variables. 
Their plight was not unlike that con- 
fronting the manager of a ball team who 
discovers, when he sets about his busi- 
ness, that his team cannot decide which 
players will play what positions. For that 
matter, the team is not sure of the rules 
of play, and the dimensions of the play- 
ing field are subject to continual change. 
Finally, there is some question whether 
the home team will receive the available 
equipment or whether it will be distrib- 
uted elsewhere. 



21 Memo, Lt Col G. S. Warren, Fiscal Officer, 
OCAC, for Col Loughry, 27 Jul 39, AFCF 030 Presi- 
dent and Cong. See also, Aide-memoires for Use in 
. . . Army Air Corps Program, 6 May 39, AGO 
Reds, WPD-OPD 3807-30-3 1. 

22 See AFCF 381. 3A Lend-Lease Aid, passim; 
WFCF 032 Lend-Lease, passim. 



Unfortunately for the staff officers con- 
cerned, the inherent complexity of their 
task did not absolve them from responsi- 
bility. Difficult, even impossible though 
the job may have been, they had to try 
to compute the needs of the service. 
Moreover, there were still other condi- 
tioning factors that had to be taken into 
account, although happily not all of these 
were as erratic as those already men- 
tioned. Some factors, such as the matter 
of spare parts and the problem of attri- 
tion, lent themselves, in theory at least, 
to almost finite calculation. 

Computing Requirements 
for Spare Parts 

Perhaps the first requisite to under- 
standing the computation of spares re- 
quired is an appreciation of the size and 
importance of the job. Experience dur- 
ing World War II showed, for example, 
that a single bombardment group flying 
approximately 31 Boeing B-17's on 15 
sorties per month burned up in that pe- 
riod some 19,000 spark plugs— about 
three tons of them. 23 Surely no one 
would dispute the magnitude or the im- 
portance of the whole problem of spares. 
German Air Force leaders minimized the 
significance of spare parts before World 
War II only to discover, when facing the 
supposedly inferior Soviet Air Force, that 
they had committed a critical mistake 
that helped bring on disaster. 24 Common 
sense alone would suggest that it is false 
economy to ground a $100,000 aircraft 



23 Data fromWFHO. 

24 Rpt to SN, Unification of the War and Navy 
Departments and Postwar Organization for Na- 
tional Security (Eberstadt Rpt), October zs, 1945, 
print of Senate Com on Naval Affairs, p. 231. 



REQUIREMENTS 



215 



for want of an $8,000 engine or a $1.00 
spark plug. 2 " 5 

The term spares involves several dif- 
ferent categories. There are spare en- 
gines purchased along with new aircraft, 
since engines wear out faster than air- 
frames and require more frequent over- 
haul, But engines, both spares and those 
in use, require stocks of spare parts, in- 
dividual components, especially items 
subject to heavy wear and breakage such 
as piston rings and spark plugs. Although 
spare airframes are designated as reserves 
or depot reserves rather than spares, there 
is a category of airframe spares— parts such 
as wing tips, wheel assemblies, control 
surfaces, and so forth, all subject to re- 
placement. Spares, then, unless defined, 
might embrace any one of several differ- 
ent groups of items. But whether taken 
individually or collectively, spares posed 
a great many difficult problems for the 
staff officers responsible for computing 
the number required. 

Throughout the years of peacetime 
planning, officers accumulated "experi- 
ence factors" on spares, yet to the very eve 
of World War II the debate over the 
question of replacement parts remained 
unsettled. It was difficult to obtain agree- 
ment on exactly what percentage of 
spares should accompany the procure- 
ment of new equipment, 26 and even 
where there was agreement, funds were 
not always available to procure the spares 
desired. 27 



25 Draft Memo, Plans, OCAC, for ASW, 3 Sep 37, 
AHO Plans Div 145.93-269. 

28 For a classic statement on the problem of spares 
centering around the feasibility of procuring 9,000- 
pound B-17 wing butts as spares, see Col F. M. Ken- 
nedy to Gen Brett, 13 May 40, AFCF 452. i-H Parts. 

27 See above, ch. IV 



Consider, for example, the case of spare 
engines. In the fiscal year 1936 Congress 
provided funds for 100 percent spare en- 
gines but authorized only 50 percent in 
the following fiscal year. In 1938 the 
Air Corps begged for more than 100 per- 
cent spare engines; the Bureau of the 
Budget favored 75 percent, while Con- 
gress allowed 50 percent. Then abruptly 
in 1939 the vast new air rearmament pro- 
gram brought novel factors into play. 28 

If policy on spare engines fluctuated 
widely in the three years before the re- 
armament program began, the introduc- 
tion of other variables during the period 
of rapid expansion did little to simplify 
matters. Under normal peacetime con- 
ditions, newly procured aircraft were de- 
livered over a period of many months 
and sometimes over one or two years, 
since manufacturers assembled units a 
few at a time on a job-shop basis. As a 
result, few engines reached the point 
where they required overhaul (after two 
or three hundred hours of operation) at 
any given time. The introduction of 
mass production in the hurried rearma- 
ment of 1939-41 changed all this. With 
large numbers of aircraft being delivered 
at approximately the same time, great 
numbers of engines reached the overhaul 
stage almost simultaneously. Because of 
this, even 100 percent spare engines 
proved inadequate since the overhaul 
load arrived at the repair depots all at 
once. With engine overhaul consuming 
anywhere from 150 to 200 man-hours 
per engine— nearly a month of working 
days— the only alternatives were to pro- 

28 CofAC to TAG, 12 Mar 37, AFCF H2.4-A, and 
ASW to Senator Copeland, 31 Mar 38, reprinted in 
Senate Hearings on WD appropriation for 1939, 
April 1, 1938, pp. 1-5. 



216 



BUYING AIRCRAFT 



cure more spare engines or to improve 
the facilities of the repair depots to pro- 
vide for engine overhaul on a large-scale 
or mass-production basis. 29 

Engine overhaul on a mass-production 
or assembly-line basis became possible for 
the first time during the expansion pro- 
gram and promised savings in both time 
and money. However, only extended ex- 
perience could show how much these 
savings would be. Meanwhile, to be ab- 
solutely certain that the air arm would 
be capable of sustained action after 
M-day, Air Corps staff officers had to 
compute requirements for engines in 
terms of the peak load anticipated even 
if doing so subsequently meant having 
a number of usable engines left over 
long after the aircraft for which they 
were procured had been written off. 30 

There were other complications stem- 
ming from the expansion program that 
tended to vex the computation of the 
spares required. Many new air bases, 
located at ever more distant points, forced 
Air Corps planners to give increasing at- 
tention to the question of distribution. 
As the pipeline grew bigger and longer 
it swallowed spares in what must have 
seemed to be a geometric progression. 
Even in peacetime the nation's fifty-odd 
air bases had to stock parts for a dismay- 
ing array of engines. Just before the war 
there were about a hundred different 
engine models in use. 31 The rearmament 



29 Maj Meyers to CofAC, 20 Feb 39, AFCF 452.1 
Proc of Aircraft; Memo, CofAC for ASW, 10 Sep 37, 
AHO Plans Div 145.93-569. 

30 For a tragic example of the disasters stemming 
from the want of a minor part, see account by R. L. 
Watson in Craven and Cate, eds., Plans and Early 
Operations, p. 227. 

•'i Memo, CofAC for ASW, 10 Sep 37, AHO Plans 



program multiplied the number many 
times. 

Staff planners in peacetime were fully 
aware of the "distribution" or "pipeline" 
factor in computing requirements, but 
throughout the decade of the thirties they 
expressed it entirely in terms of time 
rather than quantity. They visualized 
the pipeline factor as a delay in delivery 
rather than as an absolute increase in 
quantity. In their calculations they 
thereupon proposed to absorb this delay 
by moving up the dispatch of spares 15, 
30, 60, or 90 days to ensure delivery at 
the point desired at the time desired. 32 
Unfortunately, as the expansion program 
got under way experience was to prove 
that there were other factors involved. 
Newly created air bases in the field, and 
even old, long-established stations when 
rapidly expanded, tended to lose control, 
at least temporarily, over spares. Un- 
marked boxes of spares without identi- 
fying shipping tickets were to all practi- 
cal purposes unavailable even if physi- 
cally present, and operating units made 
duplicate requisitions, thus absorbing 
more spares than peacetime experience 
factors might justify statistically. 33 

Clearly, then, the problem of comput- 
ing requirements in spares was inherently 
complex though by no means impossible 
when undertaken by imaginative staff 
officers capable of using statistical tools 
or experience factors once they had 

32 See Industrial Planning Sec, WF, Computation 
of AC Requirements Based on Gen Mobilization 
Plan, 1933, AHO Plans Div 145.93-189, and draft 
(by Plans Div) CofAC to TAG, 18 Apr 39, AHO 
Plans Div 145.91-391. 

33 See, for example, R&R, Cof AS, to OCAC, 7 Oct 
41, AFCF 452. i-H Parts, and Memo, ACofAS, A-4, 
for Dir, Military Requirements, so Jul 42, AFCF 
360.01-C. 



REQUIREMENTS 



217 



been accumulated. While not impossible, 
however, the task, which proved difficult 
enough during peacetime, was to become 
enormously more involved in war. 34 
Here the problem has been arbitrarily 
confined to spares— spare engines, spare 
parts for engines, and the like. When 
the problem is projected to embrace such 
replacement items as fuels, lubricants, 
and ammunition, the intricate ramifica- 
tions to requirements calculations be- 
come evident. Unfortunately for the 
planner, estimating requirements, the cal- 
culation of spares and distribution fac- 
tors, brings no end to his labors. Yet to 
be considered is the attrition or wastage 
factor of actual operations. 

The Attrition Factor in 
Requirements 

Attrition or wastage by definition in- 
cludes all losses of operating aircraft, 
those destroyed in accidents as well as 
those lost to enemy action. Since opera- 
tional losses bear a direct relationship to 
the number of missions, strikes or sorties 
made, it becomes a matter of consider- 
able moment in computing replacement 
needs to know the number of sorties per 
month a given type of aircraft is expected 
to make. This in turn depends upon 
the concept of the mission or doctrine 
officially established for the air arm in 
general and each type of aircraft in par- 
ticular. Because the official doctrine of 
air power was, at best, in a state of flux 
during the years leading up to the war, 
it was difficult if not impossible to deter- 
mine probable replacement requirements 
with any degree of precision. 

** See below, |ch. Xx!| 



Staff officers at various echelons in the 
War Department gave a good deal of 
thought to the question of wartime at- 
trition in the years before World War II. 
The Air Corps Board set the loss rate at 
1 percent per day, or 30 percent per 
month, in 1938, but officers in G-4 con- 
sidered this too low, citing British sources 
favoring 50 percent per month as prob- 
ably more realistic. 35 

The derivation of aji accurate attrition 
formula was vital. If set too low, replace- 
ments would not be available when 
needed in combat. If set too high, it 
would impose a needless strain upon the 
national economy and upset the delicate 
balance' of resources and facilities in- 
volved in the nation's industrial mobili- 
zation. 

Vital as the attrition formula was, staff 
officers seeking to derive it were groping 
largely in the dark. They had very little 
definite information to confirm or deny 
the attrition figure suggested by the Air 
Corps Board. Not until the very eve of 
the rearmament program did the War 
Plans Division belatedly ask G-2 for 
hasty reports on the attrition experience 
of the forces fighting in China and in 
Spain. 315 This information, although far 
from ideal, was better than none at all; 
however, the Chief of Staff himself 
warned against accepting any formula 
based upon it. Shortly after the out- 
break of war in Europe in 1939 he sug- 
gested that it would be advisable to wait 
until events there provided a broader 
basis for computing attrition rates. 37 

35 Plans Div, OCAC to AC Board, 30 Mar 38, AHO 
Plans Div 145.91-528. 

3 « WPD to G-2, 31 Oct 38, AGO Reds, WPD-OPD 
3807-27. 

37 Memo, CofS for ASW, 17 Nov 39, AFCF AC 
Project Reds (Lyon Papers), bk. 22. 



218 



BUYING AIRCRAFT 



This is what the staff had to do. The 
inevitable penalty was paid in months of 
delay. 

British operational experience, helpful 
as it was, proved to be no panacea for de- 
termining attrition rates. Objective ob- 
servations at firsthand were hard to se- 
cure. The British were co-operative, but 
different observers sent conflicting infor- 
mation to the United States. Moreover, 
actual wartime operations uncovered a 
number of hitherto neglected variables 
and upset some preconceived notions. 
For example, while Air Corps planners 
believed crew exhaustion rather than 
the availability of equipment would 
be the limiting factor in deciding the 
number of missions per month, British 
experience suggested that materiel rather 
than physical limitations was the critical 
factor. 38 Weather, too, played a far more 
limiting role than prewar studies had an- 
ticipated. Experience in the RAF showed 
that there was a decided difference in 
the mission rate— and hence in the attri- 
tion rate— between winter and summer, 
a difference that could have profound 
consequences upon the over-all replace- 
ment rate. 39 

The attrition formula officially pro- 
mulgated early in 1941 , after an extended 
study of British experience, was substan- 
tially different from the official estimate 
of 1938. The revised formula antici- 
pated a wastage of 20 percent per month 
as a combined average for all types of air- 



38 AC Board Study No. 6A, 28 Mar 38, revised to 
3 May 41, AHO. See also, Dir, AC Board, to CofAC, 
27 Jan 41, and RScR, Chief, Intelligence Div, OCAC, 
to Plans, 15 Feb 41, AFCF 452.1 Aircraft Gen. 

39 Unsigned Memo for Gen Brett, 12 Feb 41, with 
Incls (see especially s, 3, and 4), AFCF 458,1 Aircraft 
Gen. 



craft in a theater of operations. In the 
zone of interior and in the possessions 
not active as theaters, the rate was set at 
3 percent per month. 40 

Seen in perspective, it is difficult to be- 
lieve that this or any other formula for 
attrition could be much more than very 
rough yardsticks. Utterly different con- 
ditions in many different theaters rang- 
ing from the arctic to the tropics against 
two entirely different enemies produced 
wastage figures that fluctuated so errati- 
cally as to defy most generalizations 
drawn upon them. Yet elusive as they 
undoubtedly were, such factors as attri- 
tion, distribution, and spares were at 
least tangible. A far more subtle factor 
in the computation of requirements was 
the tendency of staff officers to carry hab- 
its of thinking and the long-established 
administrative practices of peacetime 
over into the period of crisis. As George 
Orwell might have put it: staff officers 
on the eve of war were inhibited by 
peacethink. 

Peacetime Thinking and 
Wartime Requirements 

Peacetime thinking was budgetary 
thinking; this was not a peculiar form of 
military narrowness but an acute aware- 
ness for the facts of life— the political and 
statutory realities. The inevitable result 
of this phenomenon was that peacetime 



40 TAG to CofAC, 21 Jan 41, AFCF 452.1 Aircraft 
Gen. This formula was not again revised until long 
after Pearl Harbor. See Dir, Military Requirements, 
to CGSOS, 30 Apr 42, AFCF 400.12 Proc. For shrewd 
estimates of attrition by a civilian observer, see T. P. 
Wright, "Winged Victory . . . ," Aviation (April 
1940), and "The Truth About Our National Defense 
Program," Aviation (January 1941). 



REQUIREMENTS 



219 



thinking tended to continue until the 
actual outbreak of war even though the 
real crisis developed many months be- 
fore the shooting began. As a conse- 
quence, budgetary thinking continued 
even when the time was ripe for a shift 
to a "needs basis" from a "cost basis." 41 

The tendency to think in budgetary 
terms even as war aproached had its con- 
sequent influence upon the computation 
of requirements. Take, for example, the 
matter of planning replacements. The 
normal peacetime practice in providing 
replacements for aircraft on hand was to 
write them off as obsolete after a prede- 
termined number of years. This obso- 
letion policy obviously constituted a 
bookkeeping device. It provided an or- 
derly and systematic means for estimating 
fiscal requirements for the years ahead 
while at the same time ensuring auto- 
matic disposition of aircraft after several 
years of service. 

Unfortunately, automatic obsoletion at 
the end of five or six years, though good 
bookkeeping, had little or no bearing 
upon aircraft performance and no rela- 
tionship whatever to enemy capabilities. 
Some Air Corps officers were fully aware 
of this difference between peacetime fis- 
cal obsoletion and wartime performance 
obsoletion. Wartime obsoletion, they 
saw, would be determined by the enemy. 42 
Superior output by the enemy could, and 
in the event did, make some of this na- 
tion's aircraft obsolete even before they 



41 Sherwood, Roosevelt and Hopkins, pp. 280-81; 
Troyer Anderson, MS study of OASW-OUSW in 
World War II, 1948, OCMH, ch. VI, pp. 124-28. 

42 Chief, Mat Div, to CofAC, 6 Mar 39, AC Project 
Reds (Lyon Papers), bk. a; CofAC to TAG, 14 Apr 
39, AFCF 45s. i-A Proc of Aircraft. 



rolled off the production line. 43 Never- 
theless, the habit of thinking in peace- 
time and fiscal terms tended to persist. 

Long after the start of the expansion 
program, the imagination of those com- 
puting requirements continued to be col- 
ored by the question: "What can we af- 
ford?" rather than the question: "What 
do we need"?** And what better evi- 
dence of persistence in peacetime think- 
ing could there be than the report from 
Wright Field that an effort was under 
way to rid all combat aircraft of such 
peacetime accretions as built-in drinking 
water containers and baggage compart- 
ments! This, be it noted, did not occur 
until the summer of 1940, after the fall 
of France and more than a year beyond 
the start of the rearmament program. 45 
The computation of requirements, it 
would appear, required far more than 
mere addition. 

Requirements Computation: 
A Summary 

The computation of requirements 
posed a seemingly insurmountable task. 
Each variable was only a beginning; each 
in turn suggested countless ramifications, 
permutations, and multiple variations. 
One conclusion is inescapable: the for- 
mulation of requirements was a search 
in which absolute answers were unobtain- 
able. This, however, was no solution. 
Military necessity compels staff officers to 

43 Memo, CGAAF for Lovett, 23 Feb 43, AFCF 
458.01-A Production. 

44 For an excellent illustration of the need for 
breaking away from budgetary inhibitions in com- 
puting requirements, see Sherwood, Roosevelt and 
Hopkins, pp. 162-63. 

45 R8:R, Chief, Mat Div, to Arnold, 16 Jul 40, 
AFCF 452. i-H Parts. 



220 



BUYING AIRCRAFT 



come up with answers of some sort. If 
the only possible answers had to be ap- 
proximations, then it would seem beyond 
argument that the approximations should 
have been as accurate and as comprehen- 
sive as intensive study of available data 
would permit. Nevertheless, in the opin- 
ion of responsible staff officers in the War 
Plans Division of the General Staff, down 
almost to the very eve of war in Europe, 
no really comprehensive study of air 
power needs had ever been drawn up by 
the Army. Actually, the turning point 
came in March 1930. when the lack of a 
carefully denned statement of mission for 
Army aviation finally led the Chief of 
Staff to appoint a special Air Board to 
make a thorough investigation of the 
subject. The board's report proved to 
be an epochal document. On 1 Septem- 
ber 1939, the very day war broke out, the 
Chief of Staff, General George C. Mar- 
shall, informed the Secretary of War that 
the Air Board report established for the 
first time a specific mission for the Air 
Corps. Two weeks later the approved 
report was circulated through the Army 
as official policy and for months there- 
after the War Plans Division computed 
aircraft requirements on the basis of the 
board's findings. 46 

The appearance of the Air Board re- 
port did indeed mark a turning point, 
for until its publication no computation 
of aircraft requirements had been based 
upon a sound, thoroughgoing analysis of 
all the factors involved. The available 
record suggests that the few requirement 
studies undertaken earlier at various staff 



40 Watson, Chief of Staff: Prewar Plans and Prep- 
arations, pp. 100-101; WPD for CofS, 21 Dec 39, 
AGO Reds, WPD-OPD 3807-41. 



levels within the air arm were neither 
comprehensive nor informed. More often 
than not they tackled only a portion of 
the total problem. While ignoring some 
factors entirely, they accepted others with- 
out sufficiently questioning the assump- 
tions and premises upon which they 
rested. 47 

Though responsible military officials 
fell short in the matter of calculating re- 
quirements until the war was nearly upon 
them, there were a number of contrib- 
uting causes behind their failures. Not 
least among these were the inherent com- 
plexity of the problem and the prevail- 
ing organizational or administrative struc- 
ture that let the task of computation fall 
between two organizations, the General 
Staff and the Air Corps. 48 But the major 



47 For an example of the piecemeal approach, see 
Chief, Plans, OCAC, to CofAC, AFCF 381-B War 
Plans, See also, Ray S. Cline, Washington Command 
Post: The Operations Division, UNITED STATES 
ARMY IN WORLD WAR II (Washington, 1951), 
pp. 34-37. The best evidence in support of this 
generalization is to be found by comparing the pre- 
war concept of "requirements" with postwar think- 
ing. See, for example, the treatment contained in 
Special Text No. 97 on mobilization, issued by the 
Army Industrial College before World War II, in 
contrast with postwar studies such as Industrial Col- 
lege of the Armed Forces study L 48-29, Problems 
Inherent in the Determination of Requirements. 
For background of requirements problems in World 
War I, see Holley, Ideas and Weapons. For WPD 
condemnation of earlier studies, see Memo, WPD 
for CofS, 21 Dec 39, AGO Reds, WPD-OPD 3807-41. 

48 For a revealing example of this conflict in re- 
sponsibility, see unsigned staff study, OCAC, entitled 
Discussion of the Memo to Chief of Staff, subject: 
Air Force Requirements . . . , 30 May 41, in which 
General Staff officers are alleged to have left out 
"certain vital considerations." AFCF 381.9-E. The 
adverse effect of organizational inadequacy upon 
requirements computation was nowhere more ob- 
vious than in the sphere of intelligence. See Arnold, 
Global Mission, pp. 533-35; Memo, CofAC for G-2, 
20 Feb 37, AFCF 360.02A Foreign Aviation. See 
also, AAF Hist Study 10, p. 92. 



REQUIREMENTS 



221 



difficulty lay elsewhere: the whole ques- 
tion of requirements was never ade- 
quately studied by air arm officers as it 
should have been, broadly and philo- 
sophically, until after the publication of 
the Air Board study in the spring of 1939. 
Before then, all too often when staff offi- 
cers worried about requirements, it was 
in connection with some particular and 
pressing problem for which an answer 
was required yesterday, if not sooner. 49 
There were no wide-ranging studies made 
of requirements in the abstract. There 
were no staff manuals to which harried 
officers could turn and find suggestive 
discussions of the elements to be consid- 
ered. 50 Instead, lessons on the art of for- 
mulating requirements had to be found 
amongst the obiter dicta of previous 
studies, themselves wrought in haste and 
under pressure. Under such circum- 
stances one should hardly be surprised if 
even the ablest of staff officers failed to 
make adequately comprehensive studies 
of requirements. The first major staff 
paper on aviation requirements to ap- 
pear after the outbreak of war in Europe 
gives evidence of solid accomplishment 
in the face of obstacles. Without a doubt 
it marked a decided advance over any 
previous study of the topic. 

Within the context of the foregoing 
digression, it may prove useful to return 
to the original topic of this chapter and 
consider something of the background of 
the President's call for 50,000 airplanes 
and the military role in shaping that 
figure. 

49 For a characteristic instance of the do-it-yester- 
day type of directive, see Memo, CofAC for WPD, 
1 Nov 38, AFCF 381. A War Plans. 

50 Watson, Chief of Staff: Prewar Plans and Prep- 
arations, pp. 100-101; Memo, WPD for CofS, ai Dec 
39, AGO Reds, WPD-OPD 3807-41. 



Origin of the 50,000 Figure 

Looking back after the event, Air 
Corps officials felt free to report that they 
had determined the Army's requirements 
for aircraft "efficiently and effectively," at 
the outbreak of war in September 1939. 51 
Perhaps they had, considering the many 
imponderables involved, but easy com- 
placency and self-serving compliments 
hardly seem warranted by the facts. War 
Department spokesmen believed that the 
officially promulgated statement of re- 
quirements was, when war came in Eu- 
rope, inadequate. To begin with, as a 
G-4 officer observed, despite the Presi- 
dent's earlier directives both in public 
and in private, the Army's aircraft re- 
quirements as stated in September were 
still premised upon the funds appropri- 
ated by Congress rather than a sound 
study of the needs of national defense. 52 
Moreover, beyond this faulty premise, 
even the mechanics of computation were 
in error. The officially approved state- 
ment of aircraft requirements that had 
been drawn up by the General Staff to 
accompany the Protective Mobilization 
Plan was not in accord with the existing 
realities. Although the plan assumed 
that 9,745 aircraft would be on hand at 
the beginning of this phase of the mobi- 
lization, Congress had authorized only 
6,000 and had actually provided appro- 
priations for less than 5,500. 53 Clearly 
the PMP figures bore no relation to the 
facts. Far from being content with pre- 
vious computations, planning officers on 

51 Memo, ACofAC for Gen Marshall, 19 Dec 40, 
AFCF 452.18 Proc of Aircraft. 

5a Memo, G-4 for CofS, 7 Sep 39, AFCF 452.1 Air- 
planes, Gen. 

53 Memo, G-4 for WPD, 3 Sep 39, AGO Reds, G-4 
27277-19. 



222 



BUYING AIRCRAFT 



the General Staff undertook a new sur- 
vey of aircraft needs soon after the inva- 
sion of Poland in September 1939. 

Hemisphere Defense Reconsidered 

No one recognized the deficiencies of 
previous requirements computations 
more than the officers who studied the 
question anew. The flaws of all previous 
staff studies on the subject were only too 
evident. Not one of the studies, the plan- 
ners reported in December 1939, had 
been based upon an adequate appraisal 
of the need for hemisphere defense. 
Worse yet, most of the previous studies 
seemed to have been "aimed at justifica- 
tion of a predetermined number of planes 
rather than at a reasoned derivation of 
the number required." Here again was 
an old and only too familiar practice: 
earlier planners had cut the pattern to 
suit the cloth on hand. 64 

The horrors of the German blitzkrieg 
in Poland seem to have induced a higher 
caliber of staff work and a more careful 
weighing of existing assumptions. 55 The 
result was a staff paper undoubtedly su- 
perior to any that had preceded it. In 
the new paper the General Staff planners 
conscientiously sought to encompass the 
many variables involved. They consid- 
ered a wide range of factors such as prob- 
able or possible theaters of action, com- 
position of the forces required, attrition 
rates, and so on. Each variable they sub- 
jected to a searching analysis in terms of 
the evidence available. If the evidence 



54 Memo, WPD for CofS, 21 Dec gg, sub: Estimate 
of Number of Aircraft Required in Hemisphere De- 
fense, AGO Reds, WPD-OPD 3807-41. See above, 
Ich. VJ 

85 See memo cited in preceding note. 



was inadequate, as it indubitably was in 
a number of respects, they nonetheless 
pressed their study as far as they could. 

In estimating the number of missions 
per month, for example, they had few 
experience factors on which to rely. Brit- 
ish bomber operations in World War I 
offered a precedent rather too remote to 
be meaningful; alternatively, they could 
lean on the recent report from the Air 
Corps Board, which explored the ques- 
tion with imagination and ingenuity. 
Using the Department of Commerce safe 
limit of 100 hours per month for airline 
pilots as a maximum for endurance, the 
board had applied the maximum cruis- 
ing radius and known speed of the sev- 
eral aircraft types on hand to arrive at 
an estimate of the probable mission rate 
per month. 56 

The results achieved were still only 
estimates, but they were informed esti- 
mates—in contrast to the guesswork that 
had characterized so many of the previous 
staff studies on requirements. On the 
other hand, the survey was by no means 
exhaustive. The planners still virtually 
ignored political considerations such as 
foreign aid and made no mention of the 
distribution or pipeline factor. Never- 
theless, the resulting statement was prob- 
ably the most logical and comprehensive 
yet contrived. It laid down a require- 
ment for 2,726 tactical aircraft for active 
operations, 1,960 for reserve, and 6,831 
for training purposes. 67 

In all, the General Staff study called 
for 11,517 aircraft to provide for hemi- 
sphere defense. More than three months 

56 Ibid., tabG. 

57 Ibid, Original date of this portion of report is 
21 December iggg. Figures vary in subsequent re- 
visions. 



REQUIREMENTS 



223 



were consumed in arriving at this con- 
clusion; the problem was inherently diffi- 
cult, and staff studies on requirements 
are by their very nature slow in produc- 
tion. Yet even after this statement of 
needs had been formulated, there re- 
mained a whole series of co-ordinations 
and approvals before the paper could 
become the official aircraft requirement 
of the War Department for planning 
purposes. Begun in October 1939, the 
study was still in the headquarters paper 
mill the following spring. 58 In April 
1940 G-2 initialed the paper but sug- 
gested that it was by then out of date. 59 
Events had overtaken the planners. When 
the Air Corps finally sent a formal direc- 
tive to Wright Field authorizing procure- 
ment planning on the basis of the much 
revised and amended General Staff state- 
ment of aircraft requirements, it was too 
late; 60 "sitzkrieg" had once again become 
blitzkrieg with the invasion of the Low 
Countries, and the Western Allies seemed 
about to flounder. 

Aircraft Requirements in the 
Crisis of May 1940 

Sometime on 10 May 1940, the Presi- 
dent's military aide, Brig. Gen. Edwin 
M. Watson, sent him a sheaf of pages 



58 The sequence of co-ordination and approval is 
indicated in the following: Memo, CofAC for WPD, 
6 Jan 40, urged approval even if inadequate, since 
data were needed as point of departure for indus- 
trial planning. See also, G— 3 to WPD, 24 Jan 40; 
Memo, WPD for CofS, 18 Apr 40; Memo, WPD for 
CofS, 10 and 27 May 40. All in AGO Reds, WPD- 
OPD 3807-41. 

59 G-2 to CofS, 22 Apr 40, AGO Reds, WPD-OPD 
3807-41. 

60 CTI-46, 10 May, AFCF AC Project Reds (Lyon 
Papers), bk. 24. 



from the War Department. On the at- 
tached buck slip General Watson wrote, 
"Louis Johnson gives this as the most 
important summary of our needs yet pre- 
sented by him." Among other items of 
equipment, the "summary of needs" in- 
cluded aircraft. Congress, the Assistant 
Secretary noted, had authorized 6,000 
aircraft but had appropriated funds for 
somewhat fewer than 5,500. The legis- 
lators should be asked to provide $300,- 
000,000 to close the gap. 61 Only that 
morning the New York Times had car- 
ried a column headlined "Mighty Air 
Forces Demanded by Army" and "Plea for 
500 Flying Fortresses Will Be Put Before 
Congress Now." 62 This inspired story, 
so obviously leaked from an "informed 
source" in the War Department, coupled 
with the Assistant Secretary's memoran- 
dum to the President, clearly defined the 
immediate upper limit of aircraft re- 
quirements contemplated by responsible 
military officials. 63 On 8 May, two days 
before he became Prime Minister, Win- 



61 Memo, E. M. W. (Watson) for President, Memo, 
ASW for President, both 10 May 40. Johnson's 
memo was based on a detailed study prepared by 
the Executive, OASW, Col. J. H. Burns, 10 May 
1940. which appears to have been sent along to the 
White House as a supporting document. Franklin 
Delano Roosevelt Library, Speech File, 16 May 40. 

62 New York Times, May io, 1940, p. 8. See also. 
Memo, Chief, Mat Div, for ASW, 10 May 40, justify- 
ing the need for 400 heavy bombers, and Memo, 
Louis Johnson for President, 10 May 1940, asking 
for permission to ask the Congress to provide funds 
to begin procurement of these additional bombers. 
Roosevelt Library, Speech File, 16 May 40. 

63 According to the New York Times, May 10, 
1940, page 8, some military officials estimated that 
the combined Army, Navy, and foreign or export 
requirements for aircraft from U.S. manufacturers 
would amount to 16,000 units over the following 16 
months. Since they expected export orders to reach 
8,000, the size of the force anticipated for the Army 
and Navy is evident. 



224 



BUYING AIRCRAFT 



ston S. Churchill had admitted in the 
House of Commons— in public —that the 
failure of British troops in Norway was 
largely attributable to lack of air power. 64 
This, from the doughty First Lord of the 
Admiralty, had not left War Department 
officials unmoved. Indeed, as the New 
York Times reported, they demanded a 
"mighty" air force, but their conception 
of such a force seemed to revolve around 
400 or 500 additional airplanes and at 
the outside lingered within the author- 
ized ceiling of 6,000 units. 

The rush of events in Europe soon 
made such official thinking on require- 
ments obsolete. German troops had in- 
vaded Belgium, Luxembourg, and the 
Netherlands on the 10th. By the 14 th 
the Dutch Government was in flight to 
Britain and every hour signaled new dis- 
asters along the Allied front. To respon- 
sible officials in the United States, the 
menace of German might loomed more 
terrifying than ever before. The time 
had come for courageous action and im- 
aginative thinking. If the nation's de- 
fenses were to be erected in time, some- 
one had to cut through the existing 
restrictions, so necessary in peace and so 
frustrating in a crisis. 

There was no lack of boldness among 
the President's political advisors. The 
Secretary of the Treasury, Henry Mor- 
genthau, Jr., urged the President to ask 
Congress for a discretionary fund of 
$100,000,000 to be used to expand pro- 
ductive capacity for defense. 63 The Sec- 



04 Parliamentary Debates, Commons, vol. 360, pp. 
1348-62, May 8, 1940. The New York Times, May 9, 
1940, page 4, carried the speech in full and spread 
its message in a page 1 headline. 

*"> Memo, Morgenthnu for President, 14 May 40, 
Roosevelt Library, Speech File, 16 May 40. The Sec- 



retary of the Navy, Charles Edison, went 
still further. He wanted the President 
to ask Congress to provide a five, or even 
ten, billion dollar blank check for the 
President to spend on defense at will. 
Secretary Edison recognized full well that 
such a blank check was a radical idea, but 
he was equally certain that the nation 
faced a real crisis: "The totalitarian 
mob," he wrote, "must be shown that 
democracies can act in emergencies— can 
cut through the delays and ineffectiveness 
of legislative processes when the need 
comes." 66 

This kind of thinking, at once bold 
and dramatic, must have appealed to the 
President. He directed Assistant Secre- 
tary of War Johnson to make a study of 
the additional productive capacity re- 
quired to raise the nation's total aircraft 
output to a level of 50,000 units a year. 07 
Johnson responded to this request with 
an estimate. Meanwhile, however, the 
sequence of disasters in Europe seems to 
have led him to reconsider the statement 
of requirements he had sent to the Presi- 
dent on 10 May. To this end he directed 
his able executive, Col. James H. Burns, 
to work out a revised statement of air- 
craft requirements. 

Colonel Burns's reply was disturbing. 
The Army, he reported, had formal plans 
for expanding manpower beyond exist- 
ing strength, but no decision on such 
matters had been made for aircraft. 



retary's vision did not exclude his own interests: 
his memo suggested that he himself be appointed 
chairman of a committee with "ultimate authority," 
under the President, to use the money. 

ofi Memo, Edison for President, 14 May 40, Roose- 
velt Library, Speech File, 16 May 40. 

CT Memo, ASW for President, 14 May 40, Roose- 
velt Library, Speech File, 16 May 40. 



REQUIREMENTS 



225 



Rather than continue floundering 
amongst imponderables any longer, Colo- 
nel Burns suggested an entirely arbitrary 
statement of aircraft requirements for 
planning purposes. He projected the 
requirement for tactical aircraft on the 
existing troop basis, approved by the 
General Staff: 

Mobilization Army Tactical 
Phase Manpower Aircraft 

1. Extant Force 500,000 3,000 appropriated for 

under 5 ,500 program 

2. PMP 1,200,000 7.500"! increased in direct 

3. PMP !■ proportion to 
Augmented 4,000,000 24,oooJ manpower 

Using this table and an assumed attri- 
tion rate of 15 percent per month, Colo- 
nel Burns estimated that support of the 
third phase would require some 28,800 
replacements a year for tactical aircraft 
alone— by his estimate a threefold in- 
crease over the nation's existing airframe 
production capacity. 68 

Colonel Burns's computations were ad- 
mittedly not based upon any logical and 
systematic analysis of strategic needs; 
they were nothing more than expedient 
makeshifts, extrapolations, to establish a 
target for planning purposes. The ap- 
proach was imaginative; the figures, if 
inaccurate, were at least bold. 69 Assist- 



68 Memo, Exec, OASW, for ASW, 14 May 40, 
Roosevelt Library, Speech File, 16 May 40. In his 
computation, Colonel Burns assumed that the attri- 
tion rate would apply only to the aircraft in active 
status, or approximately two-thirds of the totals 
shown. The remaining one-third was carried as an 
operating reserve. 

The Air Corps mobilization plan extant at the 
outbreak, of war in September lgjg visualized the 
requirement for tactical aircraft in PMP augmented 
to H plus iy 2 years at just over 20,000 units. See 
Photostat of Chart by Proc Plans Div of Planning 
Br, OASW, 3 Aug 39, AFCF 452.1 Aircraft Require- 
ments Program. 



ant Secretary Johnson may have felt that 
Colonel Burns's figures were too bold or 
perhaps politically unfeasible. At any 
rate, the next day, 1 5 May 1 940, when 
he sent a revised statement of aircraft re- 
quirements to the White House for the 
President to use in an emergency mes- 
sage before Congress, he pared Colonel 
Burns's 28,800 down to ig,ooo. This cut 
he justified by saying that pilot training 
was limited to 19,000 per year and the 
production of pilots governed the pro- 
duction of airplanes 70 — an assumption 
that time was to prove grossly mistaken. 71 
Insofar as the written record goes, the 
19,000 figure was the War Department's 
last word on aircraft requirements be- 
fore the President's special appeal to 
Congress in behalf of national defense. 72 
On the question of military prepared- 
ness the President kept an open mind. 
Fully aware of the speed with which the 
surge of military operations in Europe 
was altering so many assumptions and 
plans, he was reluctant to set any targets 
for defense production. On 12 May he 
resolved to ask Congress for more money, 
but as late as the 13th he had not decided 
upon the precise number of aircraft he 



70 Memo, Louis Johnson for President, 15 May 40, 
AGO Reds, SW file. The communication is a mas- 
terpiece of political composition. It flatters the 
President, paints a horror picture of current need, 
absolves the War Department from blame for the 
situation, and ends with a statement of needs neatly 
tied up with a budget-oriented price tag. 

71 By 1944, pilot training reached an annual total 
of 57,590, airframe production, 95,272 units. AAF 
Statistical Digest (Washington, 1945), pp. 64, 1 12. 

72 Supporting the apparent lack of evidence to the 
contrary is an item in the New York Times, May 14, 
1940, p. 13. In the midst of lively speculation on 
the number of aircraft the President would ask 
Congress to provide, the Army and the Navy each 
proposed increases of about 2,000 units. 



226 



BUYING AIRCRAFT 



The President Asks Congress for at Least 50,000 Aircraft, May 1940. 



would demand. 73 His military advisors 
were providing him with staff papers on 
aircraft requirements, but the President's 
vision ranged far beyond the Army, or 
even beyond the Army and the Navy to- 
gether. He looked past the mere addi- 
tion of figures from Army and Navy staff 
studies and calculated the requirements 
of all the enemies of fascism everywhere. 
On 15 May he received cables from Am- 
bassador Bullitt in France and Ambassa- 
dor Kennedy in England. Both relayed 



73 New York Times, May 14, 
Press Secretary Stephen Early. 



1940, See remarks of 



requests for shipments of aircraft. 74 With 
the French and British requests before 
him, the President could see the aircraft 
requirements of the Army and Navy in 
fuller perspective, and from this vantage 
point he went to Congress with his fa- 
mous call for a program of no less than 
50,000 "military and naval" aircraft a 
year for the nation's defense, 73 

The President's request for 50,000 air- 
craft showed him capable of breaking 



'* Cordell Hull, Memoirs, pp. 765-66. 
75 Cong Red, May 16, 1940, p. 6244, and H Doc 
75i- 





British Spitfire 



228 



BUYING AIRCRAFT 



loose from the restraints and inhibitions 
that of necessity conditioned the calcula- 
tions of so many military officials. Easily 
forgotten in the wake of subsequent 
events is the hesitant pace that character- 
ized so much military activity before the 
President's sweeping request. For ex- 
ample, sometime earlier, Canadian offi- 
cials had generously lent the Air Corps 
a Spitfire for tests; in return they re- 
quested a P-40 Warhawk. But no, such 
a step seemed undesirable— at least in 
some staff circles. On the very day that 
the President went to Congress for 50,000 
airplanes, an Air Corps legal officer ad- 
vised against the P— 40 loan; this would 
be a technical violation of the obligations 
of a neutral. Rather than "risk adverse 
criticism," any such decision should be 
referred to "high Government officials" 
willing to take the initiative. 76 The 
President was willing to do just this, and 
accepted the responsibility. 

In the crisis of May 1940 the War De- 
partment did indeed supply the President 
with a statement of aircraft requirements. 
But the 50,000 figure finally used was 
neither an Army nor a Navy figure— it 
was a Presidential figure concocted by 
the President and his political associ- 
ates." The President's big round num- 

7 « Chief, Patents Sec, to ACofAC, 16 May 40, AHO 
Plans Div 145.93-23. 

11 Judge Samuel I. Rosenman is somewhat am- 
biguous on this point. He says (Working With 



ber was a psychological target to lift sights 
and accustom planners in military and 
industrial circles alike to thinking big. 
The 50,000 figure was not a logical sum- 
mation of strategic and tactical require- 
ments; in view of this circumstance, Sec- 
retary Hull's claim that he thought up 
the 50,000 figure and even the Beaver- 
brook anecdote on its origin may contain 
more than a grain of truth. In any event, 
the implication is clear: in the crisis it 
was the politicians acting more or less 
intuitively rather than the generals with 
their staff studies who set the 50,000-air- 
craft goal; when the War Department 
was unready to state its air power needs 
adequately, the job fell to the President. 



Roosevelt (New York: Harper and Brothers, 195a), 
page 94), the Army and Navy "furnished us with the 
materials and statistics on military requirements." 
While it is true that some figures were supplied, as 
the Roosevelt papers cited above clearly show, the 
final 50,000 figure does not appear in the papers 
sent to the White House from the War Department. 
On the "glacial pace" of those bound by peacetime 
conventions, see Sherwood, Roosevelt and Hopkins, 
page 159, He also quotes Donald M. Nelson on the 
President's vision, "his foresight was superior . . . and 
this foresight saved us all," (page 160). See also, 
MS study of OASWj-OUSW by Troyer Anderson, 
Ch. V, p. 4: and Bruce Catton, The War Lords of 
Washington (1st ed.; New York: Harcourt, Brace 
and Co. [1948]), page si, who claims some Air Corps 
officers felt the 50,000 figure was "pretty wild," and 
William L. Langer and S. Everett Gleason, The Chal- 
lenge to Isolation, 1937*1940, (New York; Harper 
and Brothers, igsa), pages 473-75, especially 474, 
suggesting that the President's figures should not 
always be taken too literally. 



CHAPTER XI 

50,000 Aircraft 



From Slogan to Program 

No doubt the President's appeal for 
more aircraft expressed in round num- 
bers served as a stimulating psychological 
target to raise the sights and fire the im- 
agination of the nation— taxpayers, voters, 
and aircraft builders— as well as congress- 
men. The big round number could 
serve equally well as a political symbol. 
It gave newsmen a convenient handle 
with which to persuade the people that 
the administration stood for all-out de- 
fense. But to staff officers fell the task 
of converting this political slogan into 
meaningful programs. 

Matching Ends With Means 

There is a great difference indeed be- 
tween a target such as 50,000 aircraft— 
either as an air force in being, or as an 
annual productive capacity for that num- 
ber such as the President demanded— on 
the one hand, and a procurement pro- 
gram for 50,000 aircraft worked out in 
detail and down to the last penny on the 
other. 1 A procurement program involves 
prior agreement on how many of what 
and when— quantity, quality, and sched- 
ule — but these fundamentals are not 
enough. In addition, plans for any given 



number of items conforming to any 
given specification, to be delivered at 
any given date, must be based upon funds 
against which contracts can be written. 
On this last point the Constitution is ex- 
plicit. Clearly then, the process of trans- 
lating the President's 50,000 slogan into 
a detailed program involved first of all 
matching ends with means— getting the 
necessary appropriations and authoriza- 
tions. 

On the surface the task of wresting 
adequate appropriations from Congress 
would appear to have been a simple one 
since the disasters in Europe had won so 
many converts to the cause of adequate 
defense. The mood of Congress had 
shifted, and congressmen were asking 
"How soon can we get it?" rather than 
"How much will it cost?" 2 Under such 
circumstances why not simply ask for the 
money and order the airplanes— all of 
them— without further ado? Unfortu- 
nately, the mechanics of government by 
consent are never quite so direct. The 
Air Corps was not operating in a legis- 
lative vacuum; it was not free to start 
from scratch with a clean slate and draw 
up a logical, orderly, comprehensive, pro- 
curement program that would cover its 
share of the 50,000 airplanes and distrib- 
ute the load evenly across the available 



1 President's Message to Congress, Cong Red, May 
16, 1940, p. 6244. 



2 Watson, Chief oj Staff: Prewar Plans and Prep- 
arations, p. 166. 



230 



BUYING AIRCRAFT 



productive facilities of the industry. In- 
stead, air arm planners had to carry on 
from where they stood, in the midst of 
the game so to speak, changing course to 
the new bearings indicated by the Presi- 
dent as Commander in Chief. The plans 
they drew up had to be fitted into the 
living present, the contracts in process of 
execution, appropriations under consid- 
eration, and so on, whether this proved 
orderly and logical or not. 

When air arm officers sat down to con- 
sider the President's new target figure in 
May 1940, the "living present" in which 
they found themselves took something of 
the following shape: the 50,000 target 
figure was a goal for the Army and Navy 
combined. Thus, after conferences with 
the Navy and an entirely arbitrary slicing 
of the pie, the Air Corps' share was some 
36,500 aircraft, a figure derived by de- 
ducting the Navy's existing program of 
13,500 from the Presidential 50,000 and 
assigning the remainder to the Air Corps. 3 
Clearly, it was the President and not the 
military who dictated the character of the 
subsequent program. 

Dividing the President's 50,000 target 
between the Army and the Navy simpli- 
fied the task in some ways so far as the 
Air Corps was concerned, but compli- 
cated it in others. Where the President 
spoke in sweeping terms, in actual prac- 
tice the detailed fulfillment of his goal 
\vould have to be divided between two 
separate agencies with consequent con- 
fusion arising from different methods of 



3 Unsigned, undated note in AC Project Reds (A. J. 
Lyon Papers), bk. 29, 36,000 Program, AFCF; Wat- 
son, Chief of Staff: Prewar Plans and Preparations, 
p. 175. See also, photostat Memo, CofAC for CofS, 
5 Jun 40, marked "Tentatively O K, GCM," AFCF 
32!-9-C- 



doing business (often with the same man- 
ufacturer) and the increased need for co- 
ordination. 

Even within the Air Corps, the target 
of 36,500 airplanes was by no means de- 
void of complications. Aircraft already 
on hand had to be taken into account. 
Allowing for obsoletion and attrition 
from accidents, available strength by the 
end of fiscal 1940 was estimated at 2,760 
aircraft. Moreover, there were yet un- 
delivered on current contracts some 
2,936 aircraft ordered on the 5,500 pro- 
gram of fiscal years 1939 and 1940. 4 
Finally, when the President made his 
dramatic appeal in May 1940, Congress 
was considering the appropriation for the 
regular military budget of fiscal 1941. 
The aircraft asked for by the War De- 
partment in this budget numbered only 
166, and the House had moved to cut the 
figure to 57. 5 But the crisis broke as the 
debate proceeded, and Congress hur- 
riedly approved the full 166 sought and 
added a supplemental measure providing 
1,900 more or a total of 2,066 aircraft in 
the Army appropriation. Thus, even 
before Air Corps planners began to con- 
sider the 36,500 program in detail, there 
were 7,700-odd aircraft on programs of 
one sort or another. 6 

Subtracting the 7,700-odd aircraft al- 
ready on program from the 36,500 that 
constituted the Air Corps' share of the 
50,000 total left some 28,000 airplanes 
yet to be ordered if the President's objec- 

4 Copy, Memo, CofAC for ASW, g Jul 40, AC 
Project Reds (L yon Papers), bit. 24, AFCF. 
5 See |ch. ixj above. 

fl Mat Planning Sec, Mat Div, OCAC, Summary of 
Air Corps Programs, 28 Jun 40, AC Project Reds 
(Lyon Papers), bk. 30, AFCF; and Mat Div, OCAC, 
CTI-80, 19 Jul 40, WFCF 111.3 Munitions Program 
1-31 Jul 40. See also H.R. gsog, 76th Cong, 3d sess. 



50,000 AIRCRAFT 



231 



tive was to be seriously pursued. Air 
Corps officers set about drafting plans to 
place orders that would secure not only 
the 28,000 aircraft (17,000 tactical types 
and 1 1 ,000 trainers) but would also look 
to the provision of a proportionate share 
of the productive capacity amounting to 
50,000 units a year as demanded by the 
President before Congress. 7 

Air Corps plans, however, were not 
evolving in complete isolation. In the 
office of the Assistant Secretary of War, 
staff officers were also trying to convert 
the President's remarks into military pro- 
grams. In the absence of an official sched- 
ule, Colonel Burns, an imaginative offi- 
cer, proposed the following timetable: 8 

By 1 October 1 94 1 , an Army of 

1 million men 

By 1 January 1942, an Army of 

2 million men 

By 1 April 1942, an Army of 
4 million men 

This, of course, was entirely arbitrary 
timing, but for want of anything else, it 
provided a troop basis and a series of 
target dates against which to project a 
comprehensive munitions program. 

Understandably enough, the planners 
in the Office of the Assistant Secretary 
wanted to include aircraft in this gen- 
eral munitions program. In doing so, 
however, they applied an old Army for- 



7 Notes for General Brett on 50,000 aircraft by 
JFP:JAL <Lt Col J. F. Powell?), 18 May 40, bk. 22; 
Conference in OCAC, Army Requirements, 36,500 
Aircraft, 19 Jun 40, bk. 29; TWX E733, Lyon to 
Brett, 31 May 40, bk. 24A. All in AC Project Reds 
(Lyon Papers), AFCF. 

» Watson, Chief of Staff: Prewar Plans and Prep- 
arations, pp. 174-75. Obviously Colonel Burns was 
applying the same line of reasoning followed in his 
memo to Louis Johnson of 14 May 1940. See above, 
|pp. 224-25I 



mula uncritically, tying the aircraft pro- 
gram to the troop basis even though ob- 
servant officers had pointed out on a 
number of occasions from 1918 onward 
that the two could not be meaningfully 
correlated. 9 

There may indeed have been ample 
justification behind the use of a troop 
basis in planning a munitions program 
for the ground forces, but harnessing the 
aircraft program to the timetable thus 
derived resulted in a schedule bearing 
little or no relation to the needs of the 
air arm or the President's target. The 
proposed ground and air arm mobiliza- 
tion schedule appeared as follows: 

By i October 1941, 1 million men 

and 9,000 aircraft 
By 1 January 1942, 2 million men 

and 18,000 aircraft 
By 1 April 1942, 4 million men 

and 36,000 aircraft 

Having established the doubling and re- 
doubling of the troop basis, the planners 
simply equated the air with the ground 
figures by taking the Air Corps' share of 
the President's target and then spreading 
it back over the schedule in the same 
doubled and redoubled pattern. 10 

When the combined air and ground 
program received approval from the Chief 
of Staff and the President, the fate of the 
air arm production schedule was sealed. 
Soon afterwards, when hasty surveys re- 
vealed that the capacity expansions nec- 
essary to meet the ultimate program 

9 See above, pp. [44-45] [48] and Holley, Ideas and 
Weapons, ch. III. 

10 Watson, Chief of Staff: Prewar Plans and Prepa- 
rations, p. 175. That this is what actually happened 
is further supported by evidence that Colonel Burns 
used the same formula only a few days before. See 
Memo, Burns for ASW, 14 May 40, Roosevelt Li- 
brary, Speech File, 16 May 40. 



232 



BUYING AIRCRAFT 



threatened to delay attainment of the 
more immediate objectives, the Chief of 
Staff and the President agreed to concen- 
trate on the intermediate goal, two mil- 
lion men and 18,000 aircraft, leaving the 
ultimate goals to some remoter date. The 
recent catastrophe in Europe made 18,000 
aircraft in hand seem definitely prefer- 
able to some 36,000 in the industrial 
bush. 11 The consequences of this deci- 
sion were crucial. Where air arm plan- 
ners had been aiming at the fulfillment 
of the dual Air Corps goal of 36,500 air- 
craft on hand plus an annual productive 
capacity for that number, they were now 
told to lower their sights. They were to 
work toward a goal of 18,000 not only 
in the matter of strength but even with 
respect to the expansion of productive 
capacity. For the ground arms, how- 
ever, while the immediate objective for 
strength on hand was cut back, the goals 
for the expansion of productive capacity 
were left at the original "ultimate" fig- 
ure. 12 

There is no evidence to suggest that it 
was ground arm opposition to air arm 
aspirations that motivated the dispropor- 
tionate cutbacks. Economic feasibility 
rather than doctrinal differences virtu- 
ally compelled a reduction in the pro- 
gram. 13 The President's fears that the 



11 Watson, Chief of Staff: Prewar Plans and Prep- 
arations, pp. 176-79. 

12 Memo, CofS for Actg SW, l Jul 40, cited in ibid., 
p. 179. For an informed opinion favoring a reduced 
goal for the immediate future, see T. P. Wright, 
"50,000 Planes a Year: How Much? How Long?" in 
Aviation (July 1940), and Wright, "The Truth About 
Our National Defense Program," Aviation (June 
1941)- 

1,1 Watson, Chief of Staff: Prewar Plans and Prep- 
arations, p. 179, especially the remarks attributed 
to the President. 



cost of the aircraft program would prove 
embarrassing may have been misplaced, 
for the Luftwaffe's furious assault on 
Britain seems to have shattered most lin- 
gering doubts in Congress as to the wis- 
dom of pouring astronomic sums into 
defense. But the fact that national de- 
fense policy was inseparable from politi- 
cal considerations should not be over- 
looked. Thus, even after the air arm 
target had been cut back to 18,000 air- 
craft, Air Corps planners were unable to 
present a request to Congress for appro- 
priations to procure this number because 
the price tag threatened to be too high. 

The Bureau of the Budget took one 
look at the $1,500,000,000 required to 
procure 18,000 aircraft and immediately 
began cutting. Using methods acquired 
over the peacetime years the bureau staff 
trimmed some 1,400 aircraft from the 
18,000 total. More important than these 
few aircraft, however, was the continu- 
ing pressure exerted to cut down all along 
the line on the current budget. As a 
consequence, the Air Corps came to Con- 
gress for funds not to finance 18,000 air- 
planes, or 18,000 minus the 1,400-odd 
trimmed off by the Bureau of the Budget 
for the President, but for a mere 3,000, 
the "first increment" of the 18,000 pro- 
gram. The original 50,000 target, or the 
Air Corps share of 36,500, w r as virtually 
lost to sight as air arm planners shelved 
it until the "military situation" in the 
future seemed to justify reconsidera- 
tion. 14 Even the 3,000 aircraft of the 



n Draft Memo, OCAC for G-4, 20 Jul 40, AFCF 
452.1-13F Proc of Aircraft; Mat Planning Sec, Mat 
Div, OCAC, Summary of Air Corps Programs, 28 
J1111 40, AC Project Reds (Lyon Papers), bk, 30, 
AFCF; Mat Div, OCAC, CTI-80, 19 Jul 40, WFCF 
111.3 Munitions Program 1-31 Jul 40. Though the 



50,000 AIRCRAFT 



233 



"first increment" became 2,181 aircraft 
when rapidly rising costs subsequently 
made it impossible to procure the full 
number with the appropriation secured. 15 
Gearing procurement programs to ap- 
propriations was clearly an intricate task. 
Delicate political decisions joined with 
the procedures of congressional govern- 
ment to make the end product something 
far removed from the initial Presidential 
proposal. But the drafting of procure- 
ment programs was not confined to 
matching ends with means, complex as 
this task was. Also involved was the ne- 
cessity of deciding exactly which from a 
number of possible models and types of 
aircraft should be procured and put into 
production. 

How Many of What Kind? 

In the years leading up to World War 
II, air arm officers had emphasized the 
role of strategic air power. If many of 
them tended to attach undue importance 
to the doctrine of heavy bomber employ- 
ment, it must be recalled that they did 
so as crusaders selling an idea in the face 
of considerable opposition. In conse- 



Prcsident and the Bureau of the Budget continued 
to use peacetime habits of thought even after the 
crisis justified a change, they were following a well- 
defined pattern. For example, Louis Johnson, an 
official of wide political experience, usually sent 
statements of military requirements to the White 
House expressed in terms of dollar costs. For one 
example among several in this period, see Memo, 
Johnson for President, 10 May 40, Roosevelt Library, 
Speech File, 16 May 40. William S. Knudsen in an 
interview with H. F. Pringle, 15 December 1945, 
asserted that the President's reluctance to ask Con- 
gress for money because of the political campaign 
definitely was a difficulty in the effort to rearm dur- 
ing the summer of 1940. See Pringle Papers, Knud- 
sen, OCMH. 

15 AAF Hist Study 22, n. 120. 



quence, when the Battle of Britain in 
the summer of 1940 abruptly demon- 
strated the critical importance of a de- 
fensive fighter force, there were some at 
least among the air power advocates who 
found their mental breastworks facing 
the wrong way. While not intending to 
neglect fighters, their preoccupation with 
bombers and strategic doctrine may have 
resulted in a neglect of defense. The re- 
sult appeared in a decided doubt as to 
the proper composition of the air arm to 
be procured under the President's appeal 
in the crisis. 

The few to whom, as Churchill said, 
so many owed so much in Britain left a 
deep impression in Air Corps circles as 
to the use to which the immediately 
available funds should be put. Although 
unwilling to abandon ultimate faith in 
the bomber, Air Corps officers began in 
haste to reconsider the role of the fighter. 
Their uncertainty is reflected in the wide 
disparities in plans and rapid fluctuations 
in strength proposed by Air Corps officers 
planning the budget to be set before 
Congress. 16 

As long as doctrine remained unsettled, 
requirements could never be clearly de- 
fined. And so long as requirements re- 
mained in doubt, those who drafted pro- 
curement programs worked in the dark. 
Those who sought to translate the Presi- 
dent's 50,000 aircraft objective into or- 
derly procurement programs had per- 
force to resort to guesses, makeshifts, and 
temporary expedients, always subject to 
change. 



ls Compare the differences in composition of force 
in the following, both of 31 May 1940: TWX, E733, 
Lyon to Brett, and TWX, E739, Lyon to Brett, AC 
Project Reds (Lyon Papers), bk. 24A, AFCF, 



234 



BUYING AIRCRAFT 



The need for matching ends with 
means and the necessity of planning with 
imponderables in the form of uncertain 
requirements as to both the number and 
the composition of the force to be pro- 
cured, serious as they were, did not ex- 
haust the roster of obstacles to effective 
planning and programming. The rela- 
tionship between productive capacity 
and the size of the air arm desired had 
to be taken into consideration as well. 

Productive Capacity Versus 
Aircraft on Hand 

The President's call for 50,000 aircraft 
provided the stimulus that set in motion 
the wave of orders already mentioned. 
Though budgetary exigencies delayed 
procurement by spreading appropria- 
tions over a period of time rather than 
providing for the full number all at once, 
the cumulative effect was still great. As 
the summer of 1940 wore away and as 
the backlog of orders began to swamp 
one manufacturer after another, the plan- 
ners paused to reflect upon the conse- 
quence of the mounting productivity. 

By the middle of August 1940, there 
were somewhere between 26,000 and 
30,000 military aircraft on order in the 
United States on Army, Navy, and Brit- 
ish contracts. 17 Sometime between June 
1941 and June 1942 these orders would 
reach a peak of deliveries and then taper 
off rapidly. But the menace of foreign 
dictators might not taper off so conven- 
iently. What then? To base the nation's 
continued defense upon the aircraft al- 
ready produced would be to rest upon 



" Memo, CofAC for ASW, 13 Aug 40, AFCF 453.1- 
13F Proc of Aircraft. 



a progressively more obsolescent force. 
And to do this would involve demobiliz- 
ing the productive capacity of the aircraft 
industry, for without adequate orders 
manufacturers would be forced to cut 
back on their production shifts. 

To impair the newly developed pro- 
ductive capacity of the aircraft industry 
would be to invite disaster akin to the 
fate of France, where aircraft output had 
never reached an adequate level. But to 
go on producing at full speed would 
mean piling up aircraft in undreamed of 
quantities. The dilemma was real in- 
deed and not unlike that vexing Alice: 
How can one run at top speed and still 
remain in the same place? General Ar- 
nold never doubted for a moment which 
policy the air arm should pursue: "It 
makes no difference what disposition is 
made of these surplus planes," he said, 
"so long as industry is kept working at 
full speed. . . ." 18 He even went so far 
as to consider a plan attributed to the 
Germans whereby obsolescent aircraft 
were melted down for scrap in order to 
keep industry at full blast on more re- 
cent models. 19 

The problem, in fine, was this: Might, 
not the President's goal become a grave? 
Was the real weapon of national defense 
any fixed number of aircraft or was it 
rather productive capacity maintained at 
full blast? In retrospect the problem ap- 
pears academic. War came before air- 
craft production reached its peak, so the 
decision never had to be made. Looking 
back upon the event it is easy to ignore 
the very real debate on the question that 



is Ibid. 

" Memo, CofAC for ASW, 15 Aug 40, SW file, 
Aircraft, 



50,000 AIRCRAFT 



235 



persisted for weeks in staff circles. 20 Even 
though Pearl Harbor made a choice un- 
necessary, to a generation engaged in the 
prolonged agony of a cold war, the road 
not taken here is well worth study by 
those who would understand the com- 
plexities of translating political slogans 
into procurement programs. 

Planner's Lament 

Reduced to practice, the simple clarity 
of the President's 50,000 goal became a 
hodgepodge of piecemeal appropriations, 
overlapping procurements, compromises 
in timing, and uncertainties in composi- 
tion. And to top it off, the achievement 
or fulfillment of the goal by a triumph 
of mass production would, paradoxically, 
bring the danger of defeat by obsoles- 
cence—unless war arrived soon enough 
to absorb the full output of the clattering 
assembly lines. 

Ideally, staff officers would pursue an 
orderly, logical, all-embracing, and com- 
prehensive program in which orders to 
the aircraft industry could be assigned all 
at once and facilities as well as production 
tools, material orders, and subcontracts 
for the ultimate program could be 
planned from the start. But the world of 
reality is never like this. In practice, air 
arm staff officers found themselves driven 
to makeshifts— they had to contrive not 
a program but a patchwork of programs, 
each an expedient compromise, each an 



20 See, for example, Chief, Mat Div, to CofAC, 
ESMR, SM, Ex-18, 25 Oct 40, AFCF 452.1-13F Proc 
of Aircraft; Memo, Exec, OASW, for DCofS, 1 Oct 
40, SW files, Aircraft, item 1783; Exec, OASW, to 
CofS, 15 Oct 40, same file, item 1839, cross reference 
from SW classified file, item 1096. 



ad hoc solution of a current difficulty.- 1 
Each such momentary solution, each such 
temporary adjustment, was destined to 
give place to some new version as new 
circumstances appeared. The ink was 
scarcely dry on each "ultimate" program 
before revisions had to be considered. 2 - 

As a consequence of this" piecemeal 
approach, the whole intricate manipula- 
tion of national resources, called indus- 
trial mobilization, was of necessity dis- 
ordered, makeshift, and jerry-built. But, 
as these pages have suggested, this was 
not so much for want of planning or 
want of vision as it was the result of hav- 
ing to do the job within the framework 
of the forms of law and a government of 
discussion and consent. 

Just how confusing the many variables 
could make the procurement process 
must be evident to any reader who has 
tried to follow the mutations and per- 
mutations of the 50,000 program already 
described. The proliferation of pro- 
grams and their various alterations were 
confusing even to the planners who lived 
in the midst of them during the rush to 
rearm in the summer of 1940. One can 
readily sympathize with the harassed offi- 
cer who explained one phase of the pro- 
gram to a colleague in words to this effect: 

The 1,900 program is really the 2,066 pro- 
gram and the 3,000 program is really the 

- 1 For evidence on the piecemeal character of the 
program and the long delay between conception and 
approval, which contributed to the chaos oE produc- 
tion, see CofAC to TAG, 5 Jul 40, and CofAC to 
ASW, 12 Sep 40, with ASW approval 19 Sep 40, AFCF 
452.1 Aircraft Gen. 

-- T. P. Wright et al., Report on Army and Navy 
Program for Procurement of Airplanes on Engines, 
Fiscal Years 1941-2, Airplane Division Report 3-A, 
NDAC, 1 Jul 40, rev 8 Jul 40. See also, CTI-80, 
19 Jul 40, WFCF 111.3 Munitions Program 1-30 
Jul 40. 



236 



BUYING AIRCRAFT 



2,181 program which is the first increment 
of the 36,500 program, but these two to- 
gether are actually called program A. The 
2,181 were not formerly included in the so- 
called 18,000 program but are now, and the 
18,000 has been reduced to 16,575 [by the 
budget cut of 1,425]. Thus, the 15,819 ob- 
tained by subtracting 2,181 from 18,000 is 
now 14,394. Therefore the grand total of 
20,066 has become 18,641. Cheerio! 23 

If the programs for procurement were, 
of necessity, confusing, overlapping, and 
piecemeal, it is not surprising to find that 
the arming and equipping of tactical 
units followed suit. The First Aviation 
Objective established during June 1940 
as the initial allocation of tactical aircraft 
anticipated a total of 54 combat groups. 24 
Since delays in production made it im- 
possible to procure the aircraft for the 
full strength of 54 groups all at once, even 
the First Objective had to be broken into 
phases known as the First Aviation 
Strength and Second Aviation Strength. 
The former called for the activation of 
all 54 groups on a cadre basis as aircraft 
became available. The latter activated 
no additional groups but simply pro- 
vided for full strength in all the units 
under the 54-group objective. 29 

The first and second strengths of the 
First Aviation Objective should not be 
confused with the Second Aviation Ob- 
jective, which called for 84 groups. The 
Second Objective was derived by com- 



43 Summary of Air Corps Programs, undated, in- 
itialed "K," AC Project Reds (Lyon Papers), bk. ag. 

Memo, Asst Cof AC for CofS, 6 Aug 40, AFCF 
321.9 C; CTI-80, 19 Jul 40, WFCF 111.3 Munitions 
Program 1-31 Jul 40. The number of aircraft in 
each group varied, of course, depending upon the 
tactical function performed by the group. 

25 Gen Arnold to Brig Gen H. W. Harms, 9 Aug 
41, AFCF 3Z1.9F. 



puting the size of force necessary to pro- 
vide a demand for replacements sufficient 
to sustain on one-shift operation an 
aircraft industry capable of producing 
36,500 aircraft a year on full-shift oper- 
ations. 2 * Capacity to produce rather than 
immediate tactical requirements thus dic- 
tated the Second Aviation Objective. 

In short, what had started off so grandly 
as the President's 50,000 goal became in 
practice something far more complicated 
and something considerably smaller. The 
50,000 had become some 33,000 and this 
was not just an Army-Navy figure but a 
total reflecting Army, Navy, and British 
orders combined. Moreover, the Air 
Corps "ultimate" goal of 36,500 was no 
longer scheduled for 1 April 1942. In- 
stead, it was put off to a remote and in- 
definite future with the more obtainable 
goal of 18,641 aircraft by 1 July 1942 
placed in its stead. 27 

The President's target, 50,000 aircraft, 
was undoubtedly useful. But there is no 
profit in being deceived by one's own 
propaganda: a psychological incentive is 
not a procurement program. The jour- 
ney from slogan to program not only 
watered down the target, but may also 
have transformed it significantly. The 
objective sought turned out to be not just 
numbers but a whole host of considera- 
tions of time and composition, of model 
and type, of financing and productive 
capacity all wrought as variables in not 
one but a series of interrelated programs. 



28 Memo, G-3 for CofAC thru SGS, 26 Apr 41, 
AFCF 321.9E. It will be observed that the military 
planners apparently did not include capacity for 
exports in their calculations. 

27 Draft of lecture, Gen Arnold, AIC, 5 Oct 40, 
WFCF 350.001 Lectures, 1941. 



50,000 AIRCRAFT 



237 



In short, by the time the President's big 
round number had been converted into 
detailed programs it became something 
altogether different from the catch phrase 
or slogan it had been originally. 

There is no need to spell out here all 
the numerous variations that subse- 
quently stemmed from the President's 
50,000 figure. It should be sufficient to 
shed some light upon the implications 
of planning within the context of the 
Presidential target, which remained the 
official aircraft production goal until after 
June 1941. 28 Clearly, this kind of target 
had its utility, even if modified and com- 
promised in use. It is possible, however, 
to be seduced by such target figures. 

There's Danger in Numbers: 
The President's "Must Program" 

Programs in Evolution 

To show how even the admittedly use- 
ful psychological target may prove dan- 
gerous or even disastrous at times will 
require a digression. By abandoning the 
chronological thread of narrative for the 
moment to look ahead and consider 
events over the three or four years fol- 
lowing the fall of France some of the 
dangers inherent in big round number 
political slogans may become evident. 

For more than a year after the Presi- 
dent's request to Congress in May 1940, 
50,000 remained the pole star of the air- 
craft program. Variations and modifica- 
tions were introduced and British orders 
raised the over-all total greatly, but 



28 NDAC Official Bull, Defense, 20 Dec 40, p. 3. 
See also, WPD 3807-83, passim. 



50,000, with 36,500 as the air arm's share, 
for months remained as the outside tar- 
get figure. To be sure, the content or 
composition of this figure changed con- 
siderably. Air Corps officers won increas- 
ing political support for the production 
of heavy bombers for long-range strate- 
gic missions. 29 During May 1941, for 
example, the President formally directed 
the Secretary of War to increase the pro- 
duction of heavy bombers to 500 per 
month. 30 After years of dispute the heavy 
bomber had at last acquired a partisan 
in the White House. Bomber produc- 
tion was to be increased "even at the ex- 
pense of closing down . . . pursuit facto- 
ries if necessary to obtain material, labor 
and tools." 31 

By the fall of 1941 it had become evi- 
dent that the air arm had moved well 
beyond the point where the momentum 
of the President's 50,000 target of May 
1940 had any further significance. Bol- 
stered by successive instances of White 
House support, the newly established 
Air War Plans Division (A WPD) in Sep- 
tember 1941 drew up an "ultimate" pro- 
duction target for the Army air arm. This 
plan called for an interim goal of 59,727 
and an ultimate total goal of 63,467 air- 



28 ASW R. A. Lovett to President, 23 Apr 41, and 
Memo, Lovett for Arnold, 7 May 41, both in AFCF 
452.1, 1856 Bomber Program. See also William Frye, 
Marshall: Citizen Soldier (Indianapolis: Bobbs-Mer- 
rill, 1947), p. 285. 

30 FDR to SW, 4 May 41, SW files, Aircraft, item 
2004. Three months later air arm officers were pro- 
posing from 750 to over 1,000 heavy bombers per 
month as suitable objectives. See Memo, CofAC for 
CofAAF, 28 Aug 41, AFCF 452.1, 1856 Bomber Pro- 
gram; Memo, Secy Air Staff for CofAC, 30 Aug 41, 
AFCF 452.1 Aircraft, Gen. 

31 Memo, Exec, OCAC, for Gen Brett, 8 May 41, 
AFCF 452.1 1856 Bomber Program. See also, TAG 
to CofAC, 9 Jun 41, AFCF 321.9E. 



238 



BUYING AIRCRAFT 



craft, including tactical and training 
types. 32 These figures were still under 
consideration when the disaster at Pearl 
Harbor swept the nation into the war 
and precipitated anew the question of 
production targets. 

Confronted with an urgent request to 
prepare a statement of requirements for 
an all-out war or a Victory Program, Air 
Corps officers simply turned to the extant 
AWPD study and lifted out the figures 
calling for an ultimate production in the 
neighborhood of 60,000 aircraft for the 
Army's air arm by 1 January 1944. Yet 
even in providing General Arnold with 
this target figure for an all-out effort, the 
Acting Chief of the Air Corps noted that 
it was really not an ultimate figure since 
AWPD studies were even then consider- 
ing a 35-percent increase. 33 One can 
only conclude that "final" and "ultimate" 
in the military vocabulary are something 
akin to the term "supercolossal" in Hol- 
lywood. Ultimate or not, these figures 
represented the scale of military plan- 
ning for air power at the time of the 
Roosevelt-Churchill Arcadia Conference 
in Washington at the end of 1941. 

The President's New Targets 

The traditional state of the union ad- 
dress to both Houses, falling as it did so 
soon after Pearl Harbor, gave the Presi- 
dent an excellent opportunity to present 
Congress with a new set of production 
targets suited to the new situation of ac- 
tual war. The President laid down a 
whole string of production objectives to 

32 Craven and Cate, eds., Plans and Early Opera- 
tions, pp. 131—32. 

33 Memo, Actg CofAC for Gen Arnold, 21 Dec 41, 
AFCF 45s. 1 Aircraft, Gen. 



guide the nation's armament program. 
And at the head of the list came aircraft. 
For 1942, the President asked a total of 
60,000 aircraft, of which some 45,000 
were to be tactical types and the remain- 
der trainers. For 1943, the goals were 
higher: a total of 125,000 aircraft, of 
which 100,000 were to be tactical types. 34 

The President's target figures were pre- 
cise—so precise, in fact, as to raise ques- 
tions as to their origin. The figures could 
have been just another set of psychologi- 
cal targets, sufficiently higher than the 
last, of course, to goad on both aircraft 
producers and military planners. On the 
other hand, they could have been sup- 
plied to the President from military or 
industry sources. The record does in- 
deed show that the staff planners within 
the War Department supplied the Presi- 
dent with figures before he returned his 
procurement directive asking in sub- 
stance for fulfillment of the goals enu- 
merated before Congress. It was com- 
mon practice for officers within the De- 
partment to write their own tickets, 
which is to say, frame ciirectives to them- 
selves for the President's signature. 35 
This may well have occurred in this par- 
ticular case. Significantly, however, the 
goals ordered by the President, 60,000 
and 125,000 aircraft in 1942 and 1943, 
were not the figures sent to the White 
House from the military planners. 

The President, it seems, took the fig- 
ures supplied as a maximum by military 
officials and arbitrarily raised them. 
When Harry Hopkins protested at this 
cavalier disregard for the facts of produc- 

34 Cong Red, January 6, 1942, p. 34. 

« FDR to SW, 4 May 41, and Lovett, ASW (Air), 
to President, 83 Apr 41, AFCF 452.1, 1856 Bomber 
Program. 



50,000 AIRCRAFT 



239 



tion, Mr. Roosevelt is said to have re- 
plied "Oh, the production people can do 
it if they really try." 36 This certainly 
suggests that the President regarded the 
figures both as rational goals and as psy- 
chological targets. Other evidence helps 
confirm this view. In sending the tar- 
gets to the military men for compliance, 
the President suggested that the Secre- 
taries of War and Navy might wish to 
confer in working out the precise distri- 
bution of the totals. 37 Had they com- 
piled the figures in the first place from 
a study of their joint requirements pre- 
sumably no such after-the-fact conference 
would be necessary. And finally, the 
President himself hinted that the new 
production targets were propaganda for 
internal as well as external consumption 
when in his address before Congress he 
pointedly called the attention of the na- 
tion's enemies to the big new production 
goals they had inspired by the attack on 
Pearl Harbor. 38 

For better or for worse, 60,000 and 
125,000 became the aircraft production 



36 Rosenman, Working With Roosevelt, p. 325. 
Robert Sherwood vouches for the story as one who 
was actually present at the time. Roosevelt, adds 
Sherwood, "was never afraid of big round numbers." 
Roosevelt and Hopkins, pp. 473-74. Donald Nelson 
credits Roosevelt with saying that he reached the 
program figures by "my usual rule oE thumb 
method." Donald M. Nelson, Arsenal of Democracy 
(New York: Harcourt, Brace and Company, 1946), 
pp. 185-86. 

37 FDR to SW, 3 Jan 42, AFCF 452.1 Aircraft, Gen. 
Craven and Cate, eds, Plans and Early Operations, 
page 247, citing a secondary source, indicates that 
the President's directive to the Secretary of War, 3 
January 1942, called for 131,000 aircraft in 1943 
rather than 125,000. The different figures suggest 
that the President was juggling the target figures 
considerably between 3 and 6 January 1942. 

38 Rosenman, Working With Roosevelt, p. 325; 
Cong Red, January 6, 194a, p. 34. 



targets for 1942 and 1943. Almost im- 
mediately critics denounced the Presi- 
dent's figures as impossible. 39 It might 
well prove entirely possible to manufac- 
ture 125,000 aircraft by 1943, but what 
kind of aircraft: the types needed, models 
suitable for combat, or mere numbers? 
To reach the prescribed targets in the 
allotted time might signal a triumph of 
production, but would it ensure victory 
in the air; would the aircraft turned out 
be superior to those of the enemy? Some 
air arm officers in grim jest branded 
this emphasis on quantity "the numbers 
racket." 

"The Numbers Racket" 

Evidence of the adverse effect of the 
President's apparent preoccupation with 
numbers without corresponding concern 
for performance began to accrue almost 
immediately. Before the President's ap- 
peal to Congress, the air arm budget for 
the coming fiscal year called for procure- 
ment of some 33,000 aircraft. After the 
President's address calling for 60,000 and 
125,000 aircraft over the next two years, 
the Chief of the Materiel Division, who 
was responsible for procurement, sent up 
a hurriedly revised program asking for 
39,000 rather than 33,000 aircraft with- 
out increase in the covering appropria- 
tion. This remarkable stretching of 
funds, it seems, was to be accomplished 
by removing some 700 expensive heavy 
bombers from the procurement program 
and substituting a greater number of 
fighters, dive bombers, and trainers. The 
heavy bombers were to be deferred to a 



38 Rosenman, Working With Roosevelt, p. 325. 



240 



BUYING AIRCRAFT 



subsequent program. 40 Such evidence is, 
of course, inconclusive when standing 
alone, but it certainly suggests a tendency 
on the part of some air arm officers to 
take their cue from the President and 
stress numbers at the expense of tactical 
need. In trying to provide the number 
of aircraft set up in the target without 
due consideration for all the other fac- 
tors involved, some of the planners may 
have been pursuing the form while losing 
the substance. 

By the fall of 1942 there were increas- 
ingly serious doubts expressed in the 
upper echelons of production planners 
as to whether or not it would be possible 
to attain the goals established by the 
President. Even after cutting down on 
the number of spare parts to be procured 
along with the aircraft on program in 
order to turn out a greater number of 
flyable units, production still lagged be- 
hind the target figures. The goals might 
be reached, a planning committee re- 
ported, if the air arm program were given 
priority over all other consumers and if 
no design changes (which would slow 
down production) were introduced. 41 
The implication of this report was clear: 
the President's goals could be reached 
only by sacrificing all else. To attain 
the desired level of production it would 
be necessary to rule out the very design 
changes that were essential to the produc- 
tion of aircraft superior to those of the 
enemy. And by the same token it would 
be impossible to attain the goals set and 
still procure those spare parts without 



« R&R, Chief, Mat Div (draft by Maj Meyers), to 
Fiscal Div, 2 Feb 42, AFCF 452.1-13F Proc of Aircraft. 

n Jt Aircraft Planning Com, WPB, to D. M. Nel- 
son, 26 Sep 42, USW files, ASF Planning Br, 452 
Aircraft. 



which even the best of flyable units would 
soon be depleted by cannibalization un- 
der combat conditions in the field. 42 

When asked to revise his production 
goals in October 1942, the President re- 
mained adamant. He was "seriously dis- 
turbed," he said, by the existing produc- 
tion failures but insisted that he expected 
full compliance with the 125,000 goal set 
in January 1942. This meant, he reiter- 
ated, an output of 100,000 tactical air- 
craft during 1943 and not merely the at- 
tainment of that rate of production by 
the end of 1943. "I am convinced," the 
President wrote, "that this is not an im- 
possible production requirement and can 
and should be carried out." 43 

Even after the President had formally 
insisted upon fulfillment of the estab- 
lished production goals, agitation for a 
cutback continued in air arm circles. 
Some officers felt that the goals were un- 
realistic. One officer intimately con- 
cerned with production planning sug- 
gested that the President's target figures 
might actually lie beyond the resources 
of the nation. The production record 
gave some support to this view. During 
September 1942, the last reported month 
then available, actual deliveries were only 
51 percent of scheduled deliveries. 44 

The record of actual output in con- 



* 2 Interestingly enough, the officer who signed the 
WPB report, Major Meyers, was the same man who 
had drafted a directive for the Chief of the Air Corps 
in October 1940 to reduce spare parts procurement 
so as to increase the number of completed aircraft 
procurable from limited funds. Memo, CofAC for 
Chief, Mat Div, 11 Oct 40, AFCF 452.1-13F Proc 
of Aircraft. 

« Memo, FDR for JCS, AFCF 334.7 Bulky, Presi- 
dent's Aircraft Program. 

** R&R, AFADS to AFDAS, 6 Oct 42, AFCF 334.7 
Bulky, President's Aircraft Program. 



50,000 AIRCRAFT 



241 



trast to scheduled output must have in- 
fluenced the President, for soon afterward 
he relented somewhat from his earlier 
stand. At his request the Air Staff sur- 
veyed the whole field of requirements 
once again, and he formally approved a 
revised statement of operational needs. 
Instead of a production target of 125,000 
aircraft for 1943, the new goal was to be 
107,000 aircraft— 82,000 tactical types and 
25,000 trainers. 45 Even this lower target 
proved difficult to hit. 

As the first quarter of 1943 slipped by, 
more and more air arm officials began to 
doubt that the new goal could be reached 
even though they were not anxious to 
have it reduced. The Deputy Chief of 
the Air Staff declared flatly that with- 
out "prompt relief"— concessions of labor 
and materials being absorbed by ground 
force and naval programs— fulfillment of 
the objective would be a "remote possi- 
bility." 46 The Assistant Secretary of War 
for Air, Robert A. Lovett, believed the 
same thing. He fed this information into 
the White House via the backstairs route, 
Mr. Harry Hopkins. 

Lovett felt that a total of 88,000 rather 
than 107,000 aircraft in 1943 would be 
a realistic estimate. 47 He urged Hopkins 
to sell this to the President. Experience 
had shown that the changing needs of 
combat required a shift from inferior 
models already in production to superior 
models just emerging from an experi- 



4n FDR to SW, 29 Oct 42, S\V files, Aircraft, item 
a 180. See also, Adm W. D. Leahy to D. M. Nelson, 
26 Nov 42, AFCF 400.17A. 

40 R&R, DCofAAF, to CGMC, 17 Mar 43, AFCF 
452.01-B Production. 

47 Lovett to Hopkins, 25 Mar 43, AFCF 452.01-B 
Production. Lovett was not far off. Actual pro- 
duction in 1943 was just under 86,000 units. 



mental status. Such a shift would un- 
avoidably reduce aircraft output. Why 
should not the President explain this 
candidly to the public, Lovett urged, so 
there would be no misunderstanding? 
The production goals could thus be low- 
ered to an obtainable figure, and the 
public would know why. 48 

A single episode early in 1943 will 
serve to illustrate the unintended ab- 
surdities stemming from an emphasis on 
sheer numbers without corresponding at- 
tention to performance or quality. The 
Douglas A-26, just emerging from ex- 
perimental status, was reported to be "the 
sweetest flying aircraft" ever built for 
the air arm. Staff officers representing 
the users or tactical arms pointed out 
that the A-26 would go 100 miles per 
hour faster and carry more bombs than 
either the North American B-25 or the 
Martin B-26. They urged that produc- 
tion of the two medium bombers be 
tapered off (rather than increased as cur- 
rently planned) and the A-26 substituted 
instead. "Fifty 100 percent aircraft," 
said the Director of Military Require- 
ments, "are of more value than a hun- 
dred 50 percent aircraft in actual com- 
bat." If it proved necessary to pay for 
this increased performance with de- 
creased production, he argued, it might 
still increase over-all combat effective- 
ness. 49 Superior performance or quality 
was clearly a more desirable objective 
than mere numbers, mass production, or 
quantity; at least this was the view of 
those who had to fly against the enemy. 



■» s Ibid. 

4 ' J R&R, Military Requirements to MC, 23 Jan 43, 
comment 3; see also, comments 1 and 2, AFCF 452.01- 
A Production. 



242 



BUYING AIRCRAFT 



On the other hand, the suppliers were 
in a position quite different from the 
users. They too wanted to procure su- 
perior aircraft. But they were judged as 
succeeding or failing not in terms of 
quality but of quantity. The Chief of 
the Materiel Command agreed "in prin- 
ciple" with the request of the users, but 
then went on to explain why it would be 
impossible to comply. General Arnold 
had stated as a "must" a total of 133,000 
aircraft in 1 943 in place of the Roosevelt 
goal of 125,000. Practical considerations 
such as ground force and naval require- 
ments coupled with the limited resources 
of the nation led him to accept, however 
reluctantly, 107,000 aircraft as the maxi- 
mum production feasible. The Materiel 
Command, then, felt committed to reach 
this target. "We cannot get even approx- 
imately the number of aircraft which we 
are directed to produce unless we adhere 
to existing types and models with the 
absolute minimum of changes." 50 In 
short, those responsible for supplying 
aircraft took their quantitative goals 
more seriously than their qualitative 
goals. This reply evoked an immediate 
outcry. 

As spokesman for the users, the Direc- 
tor of Military Requirements denounced 
the tendency to place greater emphasis 
on numbers than upon tactical useful- 
ness. He saw the issue as one of utmost 
importance and trotted out some horri- 
ble examples to support his case. Expe- 
rience in operations showed the need for 
winterizing airplanes, modifying produc- 
tion models to make them suitable for 
all-weather operation in northern cli- 



R&R, CGMC to Dir, Military Requirements, 
30 Jan 43, comment 4, AFCF 452.01-A Production. 



mates. Production authorities argued 
against winterization since the introduc- 
tion of such modifications would cut 
down on the total output. If they had 
won their point, the consequences would 
have been appalling. Airplanes not win- 
terized could not be flown to the Soviet 
Union over the northwestern or Alaskan 
route; by delaying winterization greater 
numbers could be produced, but any at- 
tempt to fly such unmodified aircraft 
through Alaska would surely have en- 
countered heavy losses. 

Worse than the delays in winterization 
resulting from an emphasis on quantity 
rather than quality was the continued 
production of obsolete types. The Di- 
rector of Military Requirements regarded 
the Vultee A-31 as a "splendid example" 
of what happened when the demand for 
quantity was allowed to dominate. Long 
after the airplane was recognized as ob- 
solete and unsuited for combat, it was 
continued in production, using up labor, 
materials, and productive capacity. 51 Ob- 
viously there was no profit in producing 
airplanes nobody wanted. 

Observations on the Numbers Game 

If the suppliers became so engrossed 
in the numbers game that they lost sight 
of tactical usefulness, then the value of the 
President's psychological targets might 
well be questioned. On the other hand, 
as British experience had shown, "the 
best is the enemy of the good." Too 
much stress on performance would leave 

51 R&R, Dir, Military Requirements, to CAS, 5 Feb 
43, comment 5, AFCF 452.01-A Production. Much 
the same thing could be said of the A-g5 and A-36. 
See Memo, Arnold for Lovett, 22 Feb 43, AFCF 
452.01-A Production. 



50,000 AIRCRAFT 



243 



airplanes forever on the drawing board 
and never in the hands of troops in the 
field. 

To balance quantity and quality called 
for genuine daring from those in com- 
mand. To stop production of an aircraft 
model, no matter how obsolete, was to 
draw public criticism. Unavoidably, la- 
bor would have to be laid off until a 
newer and superior model could be 
tooled up for production. And the lay- 
offs would take place even as everyone 
in the community, from schoolboys to 
housewives, was urged to join the war 
effort. On the other hand, it also took 
courage not to discontinue a model al- 
ready in production when a markedly 
superior model appeared on the horizon. 
The A-26 was indeed superior to the 
B-26 in several respects, but perform- 
ance was not the only factor to be consid- 
ered. Elaborate training schools were 
established to provide the B-26 with 
crew members and maintenance mechan- 
ics. Spare parts were piling up in appro- 
priate depots all over the map. Until 
these elements could be adjusted, the su- 
perior A-26 might well prove unable to 
carry as much punch to the enemy as the 
inferior B-26 simply for want of spare 
parts and mechanics trained to cope with 
its particular eccentricities. 

One final consideration should be 
brought to bear when appraising the 
President's production targets. Big 
round numbers, such as 125,000 aircraft 
in 1943, utterly failed to take account of 
the rising gross weight of military air- 
craft. In January 1942 when the Presi- 
dent announced his target for 1943, 
the average airframe weight was 4,520 
pounds. A year or so later the average 
airframe being produced weighed some 



8,900 pounds, or nearly twice as much. 52 
With some justice the Materiel Com- 
mand could claim that the President's 
target had been more than fulfilled if 
one used a 1942 rather than a 1943 yard- 
stick. But if this was so, responsible offi- 
cers of the command should have been 
doubly careful not to be coerced by the 
numbers game into stressing quantity 
out of proportion to quality. 53 

Return to Reality 

Following the President's call for 
50,000 aircraft in May 1940, air arm offi- 
cers worked day and night to complete 
the necessary contracts. At one time dur- 
ing the summer and fall of 1940 procure- 
ment officers were signing as many as 
1,000 contracts a day at Wright Field 
purchasing everything from flying boots 
to four-engine bombers. Most of these, 
of course, were for accoutrements and 
maintenance supplies, but aircraft con- 
stituted the largest dollar volume. Two 
weeks after Congress made funds avail- 
able for the Air Corps share of the 50,000 
program, the Secretary of War closed con- 
tracts for 1 1 ,000 airplanes. For the first 
time since World War I, the War Depart- 
ment purchased more than a thousand 
aircraft on a single order. The billions 
of dollars available were quite enough, 
as General Arnold said, "to stagger any 



52 Memo, Gen Echols for Bureau o£ the Budget. 
10 May 43, AFCF 452.01-B Production. 

53 There is evidence that "coercion" was employed 
to ensure a high level of acceptances regardless of 
quality. See, for example, Deputy Air Inspector to 
Chief, Technical Inspection Div (Air Inspector), 14 
Jun 43, with inclosures, citing instances of ferry pilots 
forced to take delivery of aircraft that still had ten 
days of work yet undone. AFCF 333.5 Contract 
Investigation. 



244 



BUYING AIRCRAFT 




Douglas A-26 



mere officer" and "seemingly sufficient to 
buy anything for anybody at any time." 54 

Schedules Versus Deliveries 

Billions of dollars to spend and stag- 
gering production targets, 50,000, 60,000, 
and even 125,000 aircraft, made a brave 
show— for the future. The current re- 
alities were sobering in contrast. Against 
the grand programs involving tens of 
thousands of aircraft scheduled for deliv- 
ery, the production actually achieved— 
the aircraft actually "accepted" officially 
for the air arm— amounted to little more 
than a trickle. During one week in No- 
vember 1940, more than six months after 
the President announced his 50,000 tar- 
get, the air arm received only two tactical 
aircraft from the entire industry. There 
were, it is true, nearly 40 small trainers 
turned out in that same week, but even 
this was utterly inadequate compared 



with the scheduled requirement for train- 
ers. Nor was this halting pace an iso- 
lated instance. 55 Production throughout 
the remainder of 1940 and well into 1941 
remained painfully low. The result: a 
virtually unarmed air force. 

An Unarmed Air Force 

During the summer of 1941 General 
Arnold grimly took stock of the conse- 
quences of the disastrous gap between 
orders and deliveries. The GHQ Air 
Force, supposedly the air arm's great of- 
fensive or striking arm, could muster 
only two groups of heavy bombers (70 
aircraft), two groups of medium bombers 
(approximately 114 aircraft), two groups 
of light bombers (approximately 114 air- 
craft), and three groups of pursuit (225 
aircraft), nine groups or a paper total of 
523 airplanes in all. But even this force 
was, the General felt, something of an 



« Arnold, lecture, AIC, 5 Oct 40, WFCF 350.001, 
1941; Aviation (October 1940), p. 71. 



55 Chief, Mat Planning Sec, to Tech Exec, 20 Nov 
40, and Memo, Asst CofAC for ASVV, 12 Dec 40, 
both in AFCF 319. 1 Production Rpts. 



50,000 AIRCRAFT 



245 





Martin B-26 



absurdity since it lacked the mobile air 
depots essential for sustained operations 
in the field and, worse still, to operate 
even those nine groups involved the use 
of obsolete equipment— B-18's and P-36's 
without leakproof tanks, gun turrets, 
armor and all the other modifications 
shown necessary by the war in Europe. 

The Army's aerial striking force, said 
General Arnold, was at "zero strength." 
He concluded bluntly: the air arm was 
not ready for war. Not until sometime 
after March 1942 would aircraft produc- 
tion be expected to begin outstripping 
training and pile up a backlog of air- 
craft. 56 

The small number of aircraft available 
to tactical units in the field was in itself 
alarming, but this was not the only dan- 
ger present. Even those aircraft reported 
as "tactically available" by the pitifully 
few groups and squadrons in the field 
were not always really available. At one 



point during the summer of 1941, for ex- 
ample, the Chief of the Air Corps re- 
ported that two whole squadrons of heavy 
bombers, B-17's, and an entire group of 
medium bombers were grounded for 
want of parts or because of structural 
defects appearing after delivery. 157 

In some cases even aircraft officially 
"accepted" by the War Department were 
not in fact complete. Production of Bell 
P— 39 fighters, for example, ran well ahead 
of propeller production. To avoid a 
pile-up, air arm officers arranged to ac- 
cept the units as assembled, fly them to an 
air base, remove the propeller, ship it 
back to Bell, fly away another, and so 
on. 58 Whatever the paper records may 
have indicated to the contrary, the air 
arm had a number of lame ducks on 
hand. Even after Pearl Harbor, tactical 
units continued to list aircraft on strength 



Memo, ColAAF for Wl'D, 7 Jul 41, AFCF 3S1.9E. 



57 Memo, CofAC tor Lovett, 14 Jun 41, AFCF 452.1 
Airplanes, Gen. 

38 Chief, Production Engr Br to Statistics Sec, 2 Sep 
41, AFCF 319.1 Production Rpts. 



246 



BUYING AIRCRAFT 



reports even though they lacked guns, 
turrets, radios, and bombsights— without 
which they would be of little use in a 
shooting war. 59 

If every aircraft assigned to tactical 
units were fully equipped and ready for 
operations in the field, the available 
strength at the time of Pearl Harbor 
would still have been dangerously in- 
adequate. As subsequent experience 
during World War II was to show, there 
is many a slip between the end of the 
production line and airplanes actually 
brought to bear on the enemy target. By 
the middle of the war, the record revealed, 
out of every 1,000 aircraft accepted, 38 
percent, or 380, remained in the United 
States with training units or in local de- 
fense organizations. Of the remaining 
62 percent, or 620 aircraft, reaching the- 
aters of operations, on any average mis- 
sion day, some 45 percent, or 279 aircraft, 
were undergoing repairs. This left 55 
percent, or 341 aircraft, available for 
strikes against the enemy. But on an 
average mission 20 percent of this force, 
or 68 aircraft, failed to reach the target. 
This left 80 percent, or 273 aircraft— 
27.3 percent of the 1,000 originally ac- 
cepted—as the effective force available. 00 
At any given moment, therefore, perhaps 
one-quarter of the net output of the pro- 
duction lines could be brought to bear 
against a distant enemy. 

A number of factors lay behind the 
delays that hindered the growth of the 
air arm. Diversions of production abroad, 
notably to the Russians and the British 
contributed substantially. So too did the 

59 Memo, Maj Luther Harris for Gen Arnold, 
20 Jan 42, AFCF 452.1 Airplanes, Gen. 

00 Memo, Gen Arnold for SW, 20 Jan 44, AFCF 
452.01-D Production. 



decision, when the crisis arrived, to buy 
aircraft still on the drawing board or in 
the experimental stage rather than go 
ahead with current production models. 
In buying "paper aircraft" and unproved 
experimental models the Air Corps un- 
doubtedly slowed down production, since 
there were inevitable bugs to be elimi- 
nated before production could begin. 
But at the same time, the decision re- 
sulted in the ultimate production of 
markedly superior aircraft, the B-17's for 
example, rather than the B-18 or B-23 
bomber. 61 

Fundamentally, of course, the delays 
in equipping the air arm stemmed from 
the nature of the problem itself. The 
aircraft industry was asked to effect a 
revolution almost overnight. During the 
ig3o's War Department orders for air- 
craft ranged anywhere from 100 to 600 
items a year. Then rather abruptly they 
soared, first to several thousand in early 
1940 and then to tens of thousands twelve 
months later. 62 This flood of orders led 
to a scramble— for labor, materials, fac- 
tory capacity, machine tools, and the serv- 
ices of subcontractors. Only by careful 
co-ordination and control could the wild 
scramble be synchronized into an orderly 
mobilization of resources and only by 
understanding the administrative organi- 
zations contrived to achieve this synchro- 
nization can one fully appreciate the diffi- 
culties besetting procurement for the air 
arm in this period of stress. 



01 For a good general review of factors delaying 
aircraft production, see Mat Div, OCAC, Memo 
Rpt for Red, 8 Apr 41, AFCF 452.1 Airplanes, Gen. 

c >- R&R, Chief, Mat Div, to Exec, 31 May 41, AFCF 
452.1-ig-F Proc of Aircraft, Actg Chief Stat Control 
Div to ASW (Air) ia May 43, AFCF 452.01-B Pro- 
duction. 



CHAPTER XII 

Organizing for Production 



Posing the Problem 
Military Foresight 

Of the many lessons available to the 
War Department from the experience of 
mobilization in World War I, perhaps 
none stood out more vividly than this: 
If the nation were to avoid the scramble 
that marred the rush to arm in igi7, any 
future attempt at mobilizing the nation's 
resources for war must be co-ordinated 
and controlled by a single, central agency 
under civilian control. This conclusion 
was embedded in the policies of the War 
Department and in the thinking of its 
officials. The Army Industrial College, 
the special military school on economic 
mobilization for war, laid down the dic- 
tum in its teachings and its textbooks. 1 
With more than 800 graduates scattered 
throughout the arms and services of the 
Army, not to mention the Navy, the in- 
fluence of the school was certainly appre- 
ciable. Moreover, the official mobiliza- 
tion plans actually drawn up on the eve 
of the war spelled out in unmistakable 
terms the principle of civilian dominance 
over a single, central agency. 2 

The official mobilization plan of 1939 



1 See, for example. AIC, Special Text No. 97, pub- 
lished just before World War II. See also, ASW, 
"Annual Report," p. 7, in the Secretary's annua] 
report for 1940. 

2 S Doc 134, 76th Cong, ad sess, Industrial Mobili- 
zation Plan, Revision of 1939, pp. 6-7. 



visualized the agency specifically as a 
War Resources Administration (WRA) 
staffed by "patriotic business leaders of 
the nation" and topped by an adminis- 
trator, or economic czar, appointed by 
and responsible to the President. Pend- 
ing the selection and formation of such 
an organization in time of crisis, the plan- 
ners provided for an interim or caretaker 
arrangement by which the Army and 
Navy Munitions Board would undertake 
to co-ordinate the mobilization effort un- 
til the WRA was ready to take over. 
Thus the planners, the officers who had 
drawn up the official mobilization plan 
and had spent the between-war years 
studying the special problems involved, 
would for the time being become oper- 
ators. 

The AN MB officially consisted of the 
Assistant Secretaries of War and Navy, 
with their appointees. In practice, the 
actual operation of the board fell to a 
working staff recruited largely from the 
office of the Assistant Secretary of War. 
The interim function anticipated for the 
board in preventing a scramble for re- 
sources followed several broad paths. A 
facilities division would try to allocate 
or apportion available industrial capac- 
ity for production among the various 
claimant agencies; a commodities divi- 
sion would seek to assure a fair division 
of available material resources amongst 
the various claimants by resorting to a 



248 



BUYING AIRCRAFT 



system o£ priorities; and other similar 
divisions would do the same for power, 
transportation, and so on, in each case 
co-ordinating all phases of the mobiliza- 
tion in one grand synthesis, balancing 
ends with means. 3 

After twenty-odd years of study, mili- 
tary officials had contrived a logical, 
flexible organization as well as a number 
of more or less elaborate administrative 
procedures to meet the emergency when 
it arrived. But the very excellence of 
this forehandedness may have been de- 
ceptive. At least some officials placed an 
exaggerated trust in the utility of the 
advance arrangements. 4 When war did 
break out in Europe in the fall of 1939, 
for example, the Assistant Secretary of 
War promptly asked the supply services 
if any bottlenecks were anticipated. To 
this question an air arm officer replied 
in the negative, blandly announcing that 
the Air Corps would crack down on de- 
faulting manufacturers by purchasing "in 
the open market," making the defaulters 
pay the difference in cost. 5 Here was 

3 Ibid., pp. 8-12. For a brief descriplion of ANMB, 
WRB, and Che plan, see H, J. Tobin, "Preparing 
Civilian America for War," Foreign Affairs (July 

4 For a good example of this faith in the efficacy 
of the planners' work see Assistant Secretary of War 
(Louis Johnson), "Annual Report," 1940, which 
claims that ANMB had led Army and Navy to a 
"complete understanding of each other's problems 
in industrial mobilization" (page 7), as well as the 
claim: "So far these plans have proved workable and 
of material value." "No need for revision of these 
plans in any important particular is apparent" (page 
8). 

5 Memo, Maj R. H. Magee for Cof AC, 2 Nov 39, 
AFCF 319.1-A. See also, ASW to Douglas, 27 Nov 
39, AFCF 452.1 Airplanes, Gen, and Memo, CofAC 
for Chief, Mat Div, go Jan 40, AFCF 321.9 B, for 
examples of the tendency on the part of military 
officials to "order" production according to plan, 
while refusing to "tolerate" delays. 



faith indeed in the efficacy of advance 
planning. But would there be any "open 
market" to which one could turn in a 
crisis when the productive capacity of 
every manufacturer was strained to the 
utmost? 8 It was all very well in theory 
to take a cavalier attitude and talk of 
coercing compliance or to rely confi- 
dently upon procedures worked up in 
advance to facilitate mobilization, but in 
the event theory did not always coincide 
with practice. 

Theory and Practice 

Events did not obediently follow in the 
footsteps of the planners. Of immediate 
and unavoidable concern was the trou- 
blesome reality of politics. When the 
crisis arrived, the President considered 
establishing a War Resources Board 
which, at least according to plan, would 
in an emergency be converted into a sin- 
gle central civilian agency (WRA) to con- 
trol and co-ordinate the mobilization. 
But, desirable as such an agency might 
be from the standpoint of efficient opera- 
tions, the President found that the board 
appointed simply was not politically ex- 
pedient at the moment. 7 New Dealers— 

Interestingly enough, Louis Johnson had himself 
made a special point of the circumstance that there- 
would be no "open market" in which to buy muni- 
tions in wartime. See ASW "Annual Report," 1940, 
p. 10. 

7 See above, |cn. Vlllj See also, Civilian Production 
Administration, Industrial Mobilization for War: 
History of the War Production Board and Predeces- 
sor Agencies, 1940-1945 (Washington, 1947), and R. 
Elberton Smith, The Army and Economic Mobili- 
zation, UNITED STATES ARMY IN WORLD WAR 
II (Washington, 1959), pp. 99-102, For a partisan 
account, see B. Rauch, Roosevelt: From Munich to 
Pearl Harbor (1st ed.; New York: Creative Age Press, 
1950), pp. 158-59, 207. For a brief but more ob- 
jective account, see Langer and Gleason, Challenge 



ORGANIZING FOR PRODUCTION 



249 



even within the Cabinet— protested that 
the businessmen selected for the board 
might undermine the social gains of the 
administration. Union leaders were out- 
spoken in deploring the lack of labor rep- 
resentation on the board, and at least one 
senator professed to find the board domi- 
nated by "Morgan interests." The very 
title of the board proved an embarrass- 
ment. The President was currently en- 
gaged in trying to persuade Congress to 
amend the neutrality laws. While assur- 
ing the legislators that such a move would 
not carry the nation nearer to war, he 
could scarcely afford to grant a War Re- 
sources Board large powers over the na- 
tional economy. As a consequence the 
War Resources Board was disbanded, and 
the President tried to co-ordinate the na- 
tion's mobilization efforts by a series of 
expedient makeshifts. 

Not until January 1942, more than two 
years after the beginning of hostilities in 
Europe, did the President finally create 
a really substantial superagency for cen- 
tralized co-ordination and control. More- 
over, even this agency, the War Produc- 
tion Board (WPB), received powers that 
were neither all-inclusive nor overriding. 
In brief, it took more than two years of 

to Isolation, pp. 269-72. For a fuller treatment, see 
Troyer Anderson MS in OCMH, History of the Office 
of the Under Secretary of War: 1914-1941, ch. 4, 
passim, and Harry B. Yoshpe, Plans for Industrial 
Mobilization: 1920-1939 (AIC Study 28), pp. 67-68, 
as well as Thatcher, Planning for Industrial Mobili- 
zation: 1920-40. For WRB report and other docu- 
ments as well as testimony regarding WRB and the 
failure to use the mobilization plan, see Hearings 
of Special Com Investigating the National Defense 
Program (Truman Com), pt. 42, Industrial Mobili- 
zation Plan, 1948. For what purports to be a White 
House view of WRB, see J. Alsop and R. Kintner, 
American White Paper; The Story of American 
Diplomacy and the Second World War (New York: 
Simon and Schuster, 1940), pp. 49-51, 64. 



acute crisis and confusion on the produc- 
tion front to bring theory and practice 
into line— to establish the agency that, 
long before the war arrived, the military 
planners had considered to be necessary. 

During the two years of delay between 
the time the President dropped the War 
Resources Board and the day he estab- 
lished the War Production Board, respon- 
sible officials, both military and civil- 
ian, had to hammer out organizations to 
guide industrial production in the United 
States. The organizations they contrived 
did indeed work. Alternate solutions 
might have worked better— or worse. But 
this, at least, must be stated: their task 
was vastly complicated by the President's 
delay in creating a centralized agency 
that every mobilization study between 
the wars had shown to be so necessary. 

Evolution of an Organization 

The President's call for 50,000 aircraft 
marked the real beginning of "wartime" 
mobilization for the Air Corps. While 
it is true that the de jure M-day did not 
arrive until after Pearl Harbor, the air 
arm's de facto M-day fell on 16 May 1940. 
Thus it came about that the situation an- 
ticipated by the planners simply did not 
materialize. Because the actual mobili- 
zation of the air arm took place before 
the nation legally engaged in war, and 
because the President never felt that it 
was politically feasible during that pe- 
riod to set up a powerful co-ordinating 
superagency such as the proposed War 
Resources Administration, virtually the 
whole prewar rearmament effort had to 
be conducted without effective, central- 
ized leadership. 

For eighteen months the law lagged 



250 



BUYING AIRCRAFT 



behind the facts. Nonetheless, the law 
of supply and demand was in full opera- 
tion. Just as the planners had antici- 
pated, there ensued a scramble for labor, 
materials, and productive capacity or fa- 
cilities. The abrupt increase in demand 
signaled by the President's message, even 
if it did eventually simmer down to sub- 
stantially less than 50,000 aircraft, sent 
manufacturers scurrying to their vendors 
and suppliers with ever larger orders. 
Their requests soon exceeded the supply, 
and one manufacturer after another, con- 
fronted with rapidly approaching deliv- 
ery dates, brought stories of shortages to 
the attention of the War Department 
contracting officers. 

The President had scarcely returned 
from the Hill to the White House before 
the impact of his call for 50,000 aircraft 
was felt in War Department circles. The 
air arm hastily sent a list of "anticipated 
chokepoints" to the Assistant Secretary. 
Gone was the cavalier assurance of the 
previous fall. No responsible official 
now talked of buying in the open market. 

For some items there was no source at 
all; for many others only premium prices 
would command deliveries. Aluminum 
castings, for example, precision castings 
for engine crankcases, threatened to be 
unobtainable. Limited supplies of forg- 
ings, die steel, electric furnace steel, ma- 
chine tools, nylon and linen for para- 
chute harnesses, and many other items all 
seemed about to wreck the rearmament 
program. 5 Sometimes the critical item 
was minute indeed. Iridium, for in- 



8 Memo, Acting CofAC for ASW, 5 Jun 40, SW 
files, Airplanes, item 1558a. See also, TWX, PES 
to Tech Exec, OCAC, 29 Nov 40, WFCF 111.3 Muni- 
tions Program Requirements. This whole file is 
filled with details on shortages. 



stance, used in electrical contacts or 
breaker points in spark plugs and various 
control mechanisms, posed a trivial prob- 
lem in terms of tonnage but an acute 
problem technically for want of a feasi- 
ble substitute. Sometimes the shortages 
came in entirely unexpected fields. Steer 
hides offer a case in point. While substi- 
tutes for leather flying suits might be 
readily found, at the time leather seemed 
to be an essential component in self-seal- 
ing fuel tanks. Since the very idea of 
such tanks was a novel one first found in 
captured German airplanes, no advance 
provision to obtain steer hides for the 
purpose had been made. The supply of 
aircraft engines was especially critical. 
So desperate did the mounting shortage 
of power plants become during the six 
months following the President's request, 
Air Corps officials were driven to the ex- 
pedient of borrowing engines from one 
of the leading commercial airlines in or- 
der to fly off otherwise completed B-1'7 
bombers. 9 

Probably no single material shortage 
caused more alarm and confusion than 
did aluminum. Before the beginning of 
1940, Army-Navy estimates on aluminum 
forgings contemplated a maximum re- 
quirement of 600,000 pounds per month. 
By August 1940, Alcoa was actually pro- 
ducing 1,500,000 pounds of forgings a 
month— but even this was not enough to 
meet the mounting demand. 10 Aircraft 
manufacturers were unimpressed by the 
claim that Alcoa had far exceeded antici- 
pated production. They responded to 
the facts as they saw them. Alcoa deliv- 

9 R&R, Maj Gen G. H. Brett to Gen Arnold, 21 
Dec 40, AFCF 400.114. 

10 Memo, Maj Wood for Col Spaulding, 27 Aug 40, 
AGO Reds, ASF Planning Br file, 452.1 1 P&A. 



ORGANIZING FOR PRODUCTION 



251 



eries on forgings were far behind sched- 
ule. To keep assembly lines from stall- 
ing, aircraft builders resorted to the 
expensive expedient of substituting com- 
ponents machined out of solid billets of 
aluminum. This was slow, costly, and 
put a heavy strain on already overworked 
tool rooms with the further effect of ag- 
gravating the machine tool shortage. 11 

There were indeed numerous delays 
in the production of aluminum forgings. 
Dies were difficult to fabricate, die sink- 
ers were hard to train, and heavy forging 
hammers were scarce. But not all these 
delays were attributable to the suppliers. 
Alcoa representatives pointed out that 
aircraft manufacturers were guilty of 
long delays in providing drawings for 
the parts ordered. Merely placing an 
order was not enough. Detailed draw- 
ings and specifications had to accompany 
an order. Without these it was impos- 
sible to begin work on the construction 
of forging dies. If, as was often the case 
in 1940, aircraft manufacturers were try- 
ing to put models into production di- 
rectly from the drawing board, it is not 
surprising that all too frequently the nec- 
essary detailed drawings were not avail- 
able when orders for parts went out to 
the suppliers. Even when drawings were 
sent with the initial order, it sometimes 
happened that subsequent design changes 
were introduced and the partially finished 
dies had to be reworked. 12 

While suppliers and aircraft manufac- 
turers were busy blaming one another, 
General Marshall asked, with some irri- 

11 See, for example, comments from North Amer- 
ican Aviation, initialed "L.A.," 6 Aug 40, AFCF 
004.4. 

12 Notes on Conference on Export Aluminum Al- 
loy Aircraft Production, 8 Jan 40; R&R, Chief, Mat 
Div, to Exec, OCAC, 7 Aug 40. Both in AFCF 004.4. 



tation, how the aluminum producers 
could protest that there was no shortage 
at the very moment the aircraft builders 
were explaining away their failure to 
produce by pointing to unfilled orders 
for aluminum products. 33 Government 
officials exploring the question began to 
uncover some of the answers. Apart 
from the intrinsic difficulties already men- 
tioned, they found that aircraft builders 
wanted to receive an entire order of forg- 
ings in one delivery. This not only sim- 
plified inventory control but permitted 
the aircraft builders to work or machine 
the forgings with a single tool setting. 
But to provide such bulk deliveries for 
each and every aircraft builder would 
require hammer capacity on the part of 
the material supplier far in excess of that 
available. Moreover, any such arrange- 
ment would involve the supplier in a 
feast and famine cycle— coping with peak 
loads just after the aircraft manufacturers 
placed their orders, then trying to survive 
periods of idleness. 14 

Clearly the solution to this problem 
was to schedule deliveries to aircraft man- 
ufacturers in monthly installments, ra- 
tionalizing the flow by balancing the sup- 
plier's capacity with the actual needs of 
the manufacturer's assembly line. In 
short, if the suppliers, such as Alcoa, on 
the one hand and the aircraft manufac- 
turers on the other, were to be kept from 
bootless recrimination and unrealistic de- 
livery schedules, some sort of impartial 
arbiter would have to ride herd on all 
parties concerned. 

13 Memo, CofS for ASVV, 9 Dec 40, SW files. Air- 
planes, item 1906. 

«E. R. Stettinius, jr., to ASW, 10 Dec 40; SW 
files, Airplanes, item 1906. See also, Telg, Douglas 
to NDAC, 6 Dec 40, same file. 



252 



BUYING AIRCRAFT 



In the absence of a central co-ordinat- 
ing agency, the attempt to bring order 
out of confusion fell to the existing agen- 
cies of the Executive and to hastily im- 
provised expedients. Moreover, for want 
of centralized co-ordination and control 
from 1939 on, the nation's mobilization 
was confused, disordered, and at cross 
purposes. The process of mobilization 
thus entailed a great deal of overlapping 
effort and lost motion as the parties con- 
cerned sought some means of relating 
their efforts. 

In Search of Co-ordination 

By the terms of the mobilization plan 
of 1939, the Army-Navy Munitions Board 
was to serve as an interim agency for co- 
ordination until some superior civilian 
agency such as WRA could be estab- 
lished. The problems of aircraft produc- 
tion commanded the board's attention 
immediately. Since the demand for mili- 
tary aircraft far exceeded available capac- 
ity, it was readily apparent that joint 
planning would be necessary. There 
were no air arm representatives regularly 
assigned to AN MB, so the board set up 
a special ad hoc "aircraft planning com- 
mittee" as a working staff. The commit- 
tee proposed to ensure that all material 
and industrial capacity requirements for 
the Army and Navy air arms were pre- 
sented on a common basis. 15 This was a 
useful beginning, but, unfortunately, the 
need for co-ordination was not limited to 
conflicts of interest between the Army 
and Navy. 

15 R&R, Maj Lingle to CofAC, 20 Jul 39; Col Ruth- 
erford to CofAC, 13 Dec 39; Rutherford (as chairman 
of Aircraft Planning Com, ANMB) rpt of 5 Mar 40. 
All in AFCF 334.7 ANMB. 



As early as July 1939, even before the 
outbreak of war in Europe, President 
Roosevelt directed ANMB to set up a 
clearance committee to help place foreign 
orders for military aircraft and other mu- 
nitions. 18 The work of the clearance 
committee was useful insofar as it kept 
the military services informed as to the 
nature and extent of the load being im- 
posed upon domestic capacity by export 
orders, but knowledge after the fact was 
not the same as positive control. Even 
if it had been granted full powers over 
export orders, the ANMB would obvi- 
ously have been in no position to exer- 
cise them disinterestedly since the two 
military services were themselves claim- 
ant agencies seeking an ever larger share 
of the aircraft production pie. 

In December 1939 the President re- 
moved the clearance committee function 
from ANMB and assigned it to an infor- 
mal committee of Army, Navy, and Treas- 
ury representatives with instructions to 
report through the Secretary of the Treas- 
ury to the White House. This group, 
with its membership revised, the Presi- 
dent subsequently gave official status as 
the Interdepartmental Committee for Co- 
ordinating Foreign and Domestic Mili- 
tary Purchases— the President's Liaison 
Committee, as it was commonly termed 
for convenience. 17 

Although the President's Liaison Com- 
mittee was officially assigned the task of 
co-ordinating procurement of foreign and 
domestic arms to prevent conflicts over 
materials and facilities, the President ap- 
pears to have been less interested in co- 

10 ASW, "Annual Report," 1940, p. 6. 

17 Watson, Chief of Staff: Prewar Plans and Prep- 
arations, pp. 300, 367; U.S. Govern met/t Manual, 
July 1940, pp. 59, 62-53. 



ORGANIZING FOR PRODUCTION 



253 



ordination than he was to ensure a flow 
of supplies to France and Britain. As the 
Secretary of the Treasury blandly put it 
when looking back on the event several 
years later, the Treasury had "a less pa- 
rochial view" than either the Army or 
the Navy. While this may have been 
true, there were still more compelling 
reasons w r hy the President turned to the 
Secretary of the Treasury. So long as 
isolationist Secretary Woodring remained 
at the War Department, the President 
had good reason to prefer dealing with 
Secretary Morgenthau, whose views more 
nearly coincided with his own on aid to 
the fighting allies. 18 Thus it came about 
that the interim co-ordinating role con- 
templated by the planners for the ANMB 
did not work out as anticipated. The 
prewar mobilization planners had not 
only ignored politics and personalities 
but diplomacy as well. They had given 
no real consideration to the possibility 
of foreign orders as a factor in the mar- 
ket. As a consequence, instead of serving 
as a stopgap agency building up effective 
co-ordinating procedures until a civilian 
superagency could be formed to take 
them over, the ANMB remained merely 
a joint board of the two military services 
without authority to exercise practical 
control over export orders, which com- 
prised a major share of armament pro- 
duction. This was the administrative 
situation that prevailed in the spring of 
1940 when the President asked Congress 
for 50,000 airplanes. 

Production of 50,000 airplanes threat- 



18 Henry Morgenthau, "The Morgenthau Dinrics," 
Colliers (October 18, 1947), p. 17ft. Morgenthau im- 
plies that the President was reluctant to force Wood- 
ring out because oE Woodring's many friends on the 
Hill. 



ened to swamp the aircraft industry. The 
President knew full well that co-ordina- 
tion was more than ever necessary; make- 
shift arrangements such as the Liaison 
Committee would no longer do. There- 
fore, in May 1940, he directed that all 
aircraft contracts be cleared through 
Henry Morgenthau at the Treasury un- 
til final machinery could be set up. Thus, 
contrary to the expectations of the pre- 
war planners and in apparent violation 
of all logic, the Secretary of the Treasury 
actually served as chief of the nation's 
military aircraft production— at least for 
a brief period. 19 

From its very inception, the President 
definitely regarded Morgenthau's aircraft 
production role as temporary. Even be- 
fore assigning it be had begun to toy with 
the possibility of erecting some sort of 
civilian mobilization agency as a substi- 
tute for the discarded WRB, but he 
moved with the utmost caution, for here 
as elsewhere Mr. Roosevelt was reluctant 
to let major policy decisions slip out of 
his own hands. Moreover, the time could 
scarcely have been less propitious politi- 
cally. The major party conventions in 
the summer of 1940 were only weeks 
away, and virtually any steps taken could 
cause difficulty; the President would be 
damned for whatever he did do as well 
as for whatever he failed to do. 

On 28 May the President called in 
White House newsmen to explain his 



19 Memo, FDR to SVV and CofS, 24 May 40, and 
Memo, FDR for Secy Treas, 6 Jim 40, SW files, Air- 
planes, item 1522a. See also, cross reference, Exec, 
OCAC, to Chief, Mat Div, 14 Jun 40, AFCF 452.1- 
13-F Proc of Aircraft, and CPA, Industrial Mobiliza- 
tion for War, p. 24. For suggestions of the irrita- 
tions caused in the Air Corps by Treasury inter- 
ference, see Arnold, Global Mission pp. 184-87, 193, 
197' 



254 



BUYING AIRCRAFT 



next move. Having released several trial 
balloons during the preceding week, he 
apparently felt sure of his ground. 20 To 
ask Congress for new legislation, the 
President explained, might cost weeks of 
delay. He had decided simply to make 
use of an all-but-forgotten statute on the 
books since 1916. Under this statute the 
President could have formed a Council 
of National Defense composed of selected 
Cabinet members. But this portion of 
the law he chose to ignore in favor of a 
more promising provision that author- 
ized the appointment of seven civilian 
experts as advisors to the Council. Using 
this authorization the President estab- 
lished a substitute for the ill-fated WRB, 
a substitute that came to be known as the 
National Defense Advisory Commission 
(NDAC), but was formally named the 
Advisory Commission to the Council of 
National Defense. 21 

In forming the new agency the Presi- 
dent was certain of one thing: he would 
not repeat the mistake that had virtually 
forced him to shelve the WRB. Instead 
of manning the new NDAC entirely with 
businessmen, he pointedly added a prom- 



isee, for example, the advance build-up reflected 
in the New York Times, May 19, 1940, 6:1; May 21, 
22:5; May 22, 10:4; May 26, 1:1; and May 28, 12:4. 
The most important preparatory step taken within 
the administration came on 25 May 1940 when the 
President used the authority given him in the 1939 
reorganization of the Executive to establish the Office 
for Emergency Management (OEM), as an admin- 
istrative catchall for defense agencies. See Bureau 
of the Budget, The United States at War (Washing- 
ton, 1946), pp. 21-23. See also, Sherwood, Roosevelt 
and Hopkins, pp. 157-60. 

21 Transcript of Press Conference, 28 May 1940, 
Samuel I. Rosenman, compiler, The Public Papers 
and Addresses of Franklin D. Roosevelt, vol. 9 (New 
York: The Macmillan Company, 1941), 2410!. See 
also, Act of August 29, 1916 (39 Stat 649), and Smith, 
The Army and Economic Mobilization, pp. 102-03. 



inent labor leader to the list. His choice, 
Sidney Hillman, was carefully selected to 
avoid alienating labor votes. Hillman, 
the President confided to reporters off 
the record, was "just half way between 
John Lewis and Bill Green." 22 

The question of leadership for the com- 
mission as a whole was not so readily 
solved. When a perspicacious reporter 
raised this question, the President was 
evasive. "Why bring up the subject?", 
he parried. 23 To co-ordinate its several 
members, the commission was to have no 
chairman other than the President him- 
self, who would preside over a full-dress 
meeting once a week. Republican critics 
charged that the President was playing 
politics with national defense. 24 Even 
within Executive circles there was con- 
cern lest the President's expedients im- 
pair the functioning of the civilian 
agencies long planned for the day of 
mobilization. 26 

For better or for worse, this was the 
situation with the coming of summer in 
1940: an immense mobilization had be- 
gun to gather headway. More than a 
billion dollars of abnormal expenditures 
sent disturbing shock waves through the 
national economy. In failing to estab- 
lish the civilian agency sought by the 
planners, the President left the task of 
co-ordinating the mobilization effort to 



-'- Press Conference, 28 May 40, in Rosenman. 
Public Papers and Addresses of Franklin D. Roose- 
velt, 246. 

s * Ibid., p. 249. 

2 * See criticisms of Herbert Hoover and Governor 
Thomas E. Dewey reported in New York Times, 
May 30, 1940, 9:4 and 15:4. 

25 F. L. Kluckhohn in a signed article, New York 
Times, May 28, 1940, 13:1, reported objections by 
officials responsible for national defense. 



ORGANIZING FOR PRODUCTION 



255 



a whole series of more or less parallel 
and conflicting agencies that had to grope 
their way toward some sort of modus 
Vivendi. 

As any brand new second lieutenant 
soon learns, there is a great difference 
between issuing an order and getting it 
obeyed. This the President clearly un- 
derstood. 29 Merely appointing a com- 
mission to co-ordinate the mobilization 
effort would not immediately achieve 
that goal. In fact, the results were to be 
quite the reverse at first since the creation 
of a new agency such as the NDAC in- 
jected a further complication into an al- 
ready confused pattern of administration. 

To begin with, there was the matter 
of recruiting a staff. Mr. William S. 
Knudsen of General Motors agreed to 
serve as commissioner of production and 
Mr. Edward R. Stettinius, Jr., of U.S. 
Steel accepted a post as commissioner of 
raw materials. In addition to Mr. Hill- 
man, who was, as previously mentioned, 
to be responsible for the labor supply, 
there were four other commissioners con- 
cerned with prices, farm products, trans- 
portation, and consumer interests— all 
elements of the economy liable to abnor- 
mal stress under the impact of millions 
on millions of dollars to be poured out 
in war orders. Naming the seven com- 
missioners was only the beginning. Be- 
yond these seven a whole series of staff 
members had to be located and then per- 
suaded to accept the pleasures and tribu- 
lations of public service. The big ban- 
ner headlines at the end of June may 



28 Press Conference, 28 May 40, in Rosenmari, 
Public Papers and Addresses of Franklin D. Roose- 
velt, p. S45. 



have made it appear that the commission 
was indeed a fact, but for the people in- 
volved the process took longer. It re- 
quired time to shift gears mentally as 
well as to adjust physically to the job in 
Washington. Since the NDAC contin- 
ued to recruit staff during the rest of the 
year, it continued to suffer from the un- 
avoidable annoyances of a shakedown 
cruise throughout the period. 27 

The three busiest commissioners, 
Knudsen, Stettinius, and Hillman, were 
all men of wide experience and acknowl- 
edged capabilities in their respective 
spheres. Nonetheless, like old dogs in 
new beds even the most experienced of 
men needed time to trample out routines 
for doing business. The commissioners 
as well as lesser men had to discover ex- 
actly what their jobs would be. The 
President had defined the function of 
NDAC in general terms but left to 
time, circumstance, and the commission- 
ers themselves the more detailed refine- 
ment of the agency's role. 

Demarking the precise limits of NDAC 
power was not easy. If the new commis- 
sioners and their staff members had only 
vague and general notions of their func- 
tions and procedures, the various arms 
and agencies with whom they were to 
deal were no better informed. 28 Two 



27 Mr. Knudsen and Mr. Stettinius seem to have 
cleaned out their corporate desks rather briskly. 
See New York Times reports of June 2, 1940, IV, 
7:1; and June 5, 1:3. For continuing recruitment 
of staff see, for example, June 14, 13:1; June 30, 8:1; 
and October 23, 13:6. 

28 For evidence of initial efforts to define the role 
of NDAC, see U.S. Government Manual, July 1940, 
pp. 50-53. Compare with comments in NDAC Offi- 
cial Bull g, Defense, 30 Aug 40, and WPB Doc Pub- 
lication 1, Minutes of the Advisory Commission to 
the Council of National Defense, passim. 



256 



BUYING AIRCRAFT 




General Knudsen 



weeks after the formation of NDAC, the 
executive at OCAC noted that the Presi- 
dent had set up "two commissions" that 
would "undoubtedly have dealings with 
the Air Corps." He sent a staff officer 
scurrying to dig up the facts about this 
new development, a job that took five 
days. 29 In short, even old-line, estab- 
lished organizations such as the Air Corps 
had to hammer out a working relation- 
ship with the NDAC, while the newly 
appointed commissioners and their staffs 
decided what their own jobs actually 
should be. 30 Instead of the well-drilled 



2 » R&R, Exec, OCAC, to Chief, Info Div, 14 Tun 
40, and notes in reply, 19 Jun 40, AFCF 334.8 OPM. 

30 For details, see WPB, MS, Relations Between the 
Armed Services and NDAC, Special Study No. 3, 5 
Nov 43. For an unfortunate example of TVDAC-AC 
relations, see Wright to Arnold, 23 Aug 40, and re- 
lated correspondence, AFCF 452.1-191. 



and smoothly functioning team envi- 
sioned by the mobilization planners in 
peacetime, the President's alternative 
turned out to be something more akin 
to a pick-up team of strangers who had 
never played together before and lacked 
general agreement on the rules of the 
game. 

Insofar as the air arm was concerned, 
the NDAC meant for the most part the 
Aeronautical Section of Commissioner 
Knudsen's Production Division. As head 
of the Aeronautical Section, Knudsen 
chose George J. Mead, a former vice- 
president and engineer at United Air- 
craft where he had helped develop the 
famous Wasp engine. Mead had come 
to Washington earlier at the call of the 
Secretary of the Treasury to study the 
problems of engine production, so he was 
already at least partially acclimated. 
Capt. S. M. Kraus of the Navy's Bureau 
of Aeronautics and S. Paul Johnston, for- 
mer co-ordinator of research for the Na- 
tional Advisory Committee for Aero- 
nautics (NACA), came in to serve as 
administrators in the new organization, 
while Mr. T. P. Wright (Vice President 
and Director of Engineering at Curtiss- 
Wright) and A. E. Lombard, Jr. (of Cali- 
fornia Institute of Technology) brought 
to the staff professional skills of the ut- 
most importance in dealing with the im- 
mediate problem of production sched- 
uling. 31 

Broadly speaking, the NDAC was "to 
coordinate" the nation's defense effort. 



31 WPB, Aircraft Production Policies Under the 
National Defense Advisory Commission and Office of 
Production Management: May 1940-December 1941, 
Special Study No. 21, 30 May 46, p. 4. 



ORGANIZING FOR PRODUCTION 



257 



But what did that mean? According to 
the old capitol saw, a co-ordinator is sim- 
ply a fellow with a desk between two ex- 
pediters. As a matter of fact, the NDAC 
undertook both functions. Sometimes 
the expediting was imaginative and bene- 
ficial. This was certainly true, for exam- 
ple, when NDAC took the lead in urging 
the armed services to use "letters of in- 
tent" authorizing manufacturers to pro- 
ceed with construction even before com- 
pleting the details in formal contracts. 32 
On the other hand, there were times when 
NDAC officials seemed to go beyond co- 
ordinating and expediting to intrude in 
what were essentially military decisions. 
The borderline was not always clearly 
defined, of course, but the military men 
were understandably disturbed when, for 
example, NDAC officials in search of 
greater output questioned the advisabil- 
ity of putting the four-engine B-17 
bomber into mass production. 33 

Probably the most important contribu- 
tion of the NDAC to aircraft production 
is to be found in the comprehensive series 
of reports undertaken by the Aeronauti- 
cal Section staff to survey the task at hand 
and define the nature and scope of the 
job to be done. The titles of the several 
staff studies are sufficient to suggest their 



32 Memo, Mr. Eaton (NDAC legal consultant) for 
Col Schulz, OASW, sg Jul 40, SW files, Airplanes, 
item 1652. 

33 Memo, ASW for Knudsen, 18 Oct 40, SW files, 
Airplanes, item 1824. See also, TWX, Echols to 
Brett, 23 Jul 40, WFCF 111.3 Munitions Program. 
The tendency of NDAC officials to slight military 
considerations (range, etc.) in emphasizing produc- 
tion offers an interesting counterfoil to the conten- 
tions of Eliot Janeway in The Struggle for Survival 
(New Haven, Conn.: Yale University Press, 1951), 
pages 212-18, regarding the role of NDAC-OPM in 
weapon design, etc. 



value. Report No. 1,11 June 1940, Mili- 
tary Air Force of the United States; Pres- 
ent and Anticipated set up production 
targets. Report No. 2, 14 June 1940, 
Aluminum Alloy Requirements for Air- 
frames, Engines, and Propellers; 50,000 
Plane Program tackled one of the most 
pressing bottlenecks. Subsequent reports 
went on to measure available productive 
capacity for airframes, engines, and other 
major components. 34 These studies were 
of value (even if not always fully ex- 
ploited) insofar as they helped familiar- 
ize the civilian staffs with the question 
as a whole and to survey and define the 
tasks in hand. 35 But to survey the prob- 
lems was not to solve them. While it is 
undoubtedly true, as "Boss" Kettering 
has said, that "a problem defined is half 
solved," a very large half was yet to be 
mastered. There were shortages growing 
daily more pressing, and somehow or 
other the makeshift administrative or- 
ganizations charged with orienting the 
national drive to rearm would have to 
prevent the uncontrolled scramble that 
had marred the pace of mobilization in 
previous wars. 

The NDAC and the Air Corps 

When the NDAC first began to func- 
tion as an agency for co-ordinating the 
rearmament effort, the whole vexing 
problem of shortages had already become 

H See above j ch. vTh] 

35 By no means insignificant was the NDAC role 
in educating the public, manufacturers, etc., in the 
nature of the task at hand and in the problems to 
be expected. See, for example, Wright, "50,000 
Planes a Year: How Much? How Long?" Aviation 
(July 1940). Although written before Wright joined 
NDAC, the article suggests the kind of familiariza- 
tion that was undertaken. 



258 



BUYING AIRCRAFT 



acute for the aircraft industry as well as 
other elements of the economy. The 
plight of the industry can be explained 
most readily by coming down to cases. 
For example, when an important air arm 
subcontractor complained of a pressing 
need for a certain machine tool necessary 
to continue his flow of production unin- 
terruptedly, he asked if there were not 
some standard, routine procedure where- 
by he might qualify for a priority to ob- 
tain the desired tool without delay. This 
was a legitimate request and a most logi- 
cal one too, since the mobilization plan- 
ners were generally understood to have 
spent the long peacetime years preparing 
for just such an eventuality. Unfortu- 
nately, the air arm had little positive re- 
sponse to make other than to cite a recent 
enactment of Congress authorizing such 
priorities. 36 Obviously the new law 
would remain entirely meaningless until 
it was translated into administrative pro- 
cedures and put into force. 

The plain truth of the matter was that 
after more than six months of effort, no 
detailed procedures had been worked out 
to cope with the intricate question of 
priorities; all seemed to wait upon the 
action of Congress, which finally came 
at the end of June ig40. 37 Thus, as the 
newly appointed civilian staff of NDAC 
assembled, the officers in ANMB were 
only beginning to contrive ways to exe- 
cute the system of priorities. The peace- 



si' Add Precision Products Corp., Burbank, Calit., 
to Arnold, 28 Jun 40, and reply, 11 Jul 40, AFCF 
004.4. 

37 Act o£ 28 June 1940, Public Law 671, 76th Cong. 
For evidence of earlier War Department concern 
with the priority question, see, for example, ASW to 

Pump Engineering Service Corp, 1 Dec gg, SW files. 
Air Corps Gen Questions, item 734. 



time planners had visualized the civilian 
agency as taking over a going concern 
set in motion at the onset of the crisis. 
In the event, the civilian NDAC began 
to consider the question of priorities at 
almost the same time as did the military 
ANMB. 38 

The ANMB, of course, was only a head- 
quarters agency for resolving Army-Navy 
conflicts, in this instance the relative im- 
portance of the claims of their respective 
contractors. The actual point of contact 
between business and the armed services 
remained, for the Army at least, the Ord- 
nance Department, the Quartermaster 
Corps, the Air Corps, etc. It was these 
services conducting day-to-day business 
with the contractors that received the 
complaints and passed them on to the 
ANMB. For the Air Corps, this point 
of contact with manufacturers was not 
the office of the Chief, OCAC, in Wash- 
ington, but the remotely located arm of 
that office, the Materiel Division at 
Wright Field. The typical Air Corps 
contractor, of course, had only the 
vaguest notion of the ANMB, whereas 
he was actually dealing with the engi- 
neering and contracting officers at Wright 
Field. It was, therefore, both logical and 
sensible to direct contractors with prior- 
ity requests to file them through already 
familiar channels. The arrangement in- 
volved a minimum of confusion and de- 
lay, but at the same time it created a new 
problem in itself. With Wright Field in 
Ohio and the ANMB sitting in Washing- 
ton, who would plead the case of air arm 



38 See Memo, Secy, ANMB, for Cof AC, 17 Jun 40, 
for details of the board's priority committee and its 
formation. A priority procedure was worked out 
about a month later. See Proposed Procedure, 10 
Jul 40, AFCF 334.7 ANMB. 



ORGANIZING FOR PRODUCTION 



259 



priorities before the AN MB? To resolve 
this difficulty the Chief of the Air Corps 
established a Priorities and Allocations 
Section in OCAC to serve as a special 
mediator and advocate for all air arm re- 
quests. 39 

The advantages of maintaining a spe- 
cial advocate in Washington were obvi- 
ous. The Priorities Section was ever 
ready to present arguments in favor of 
giving priority treatment to aircraft man- 
ufacturers for tools, materials, and com- 
ponent items. Air arm officials believed, 
not without reason as it turned out in 
practice, that it would pay dividends to 
"retain counsel." On the other hand, 
there were also some disadvantages in 
this arrangement. The more layers or 
echelons placed between contractors in 
the field and the top of the ladder in 
Washington, the more numerous the 
opportunities for misunderstanding, de- 
lay, and multiplication of papers— not to 
mention the difficulties involved in edu- 
cating the staff members concerned in 
each additional echelon. 

The general procedure worked out by 
AN MB and the services for handling pri- 
orities was to deal with individual cases 
as they arose. 40 When, for example, Bell 
Aircraft asked for a priority on the deliv- 
ery of a much needed Warner-Swasey 
turret lathe, the request went to Wright 
Field where most of Bell's earlier con- 
tractual contacts had been made. After 
surveying the situation, officials there 
found that a lathe of the desired type 

39 Chief, Allocations and Priorities Sec, to Admin, 
Exec, 2 Dec 40, and 21 Dec 40, and Col W. F. Vo- 
landt, OCAC, to Secy, ANMB, 13 Nov 40. All in 
AFCF 321.9D. 

*° For a description of this procedure, see ANMB 
Priorities Com Cir No. i, 9 Dec 40, AFCF 334.7 
ANMB. 



could be secured by diversion from an 
order previously placed by another Air 
Corps contractor, the Lycoming Manu- 
facturing Company. This information 
was sent as a claim or request to the 
Priorities and Allocations Section of 
OCAC, where it was presented for adjudi- 
cation to the ANMB priorities committee. 

The officers of ANMB did not take long 
to discover that decisions such as the one 
raised by the Bell request were exceed- 
ingly difficult to make. Was the end 
product at Bell more important than the 
end product at Lycoming? Is an airframe 
more important than an engine? And 
even where the relative importance of 
the end products was clear, as in extreme 
cases, it proved difficult if not impossible 
to make intelligent decisions on priori- 
ties since seldom were all the facts in 
hand. Before assigning priorities on ver- 
tical boring mills, for example, it was 
necessary to determine the number and 
specifications of all those required by 
contractors holding current orders and 
the number available or on order with 
the tool builders. This involved a series 
of telegrams and phone calls to muster 
the desired data— not only for boring 
mills and machine tools in general but 
for other critical items as well such as 
raw materials and component parts. 

The competition for tools and supplies 
was not, of course, confined to contractors 
supplying the Air Corps. Airline oper- 
ators, anxious to expand with the war 
boom, began to place orders in increas- 
ing numbers with the aircraft manufac- 
turers. Since no statutory profit limit 
curbed the aircraft builders' net on sale 
to commercial carriers, such orders held 
a considerable allure even against the 
large volume promised in military con- 



260 



BUYING AIRCRAFT 



tracts. The obvious result was a conflict 
of interests: civilian versus military pro- 
duction. This was equally true in the 
matter of export customers for military 
aircraft. The second half of 1940 was 
the peak period of foreign armament pur- 
chases in the United States, and aircraft 
represented a major element of these 
transactions. Thus not only did manu- 
facturers find foreign orders more profit- 
able, but in a number of instances they 
accounted for a larger volume of busi- 
ness than sales to the Army and Navy. 41 
As a consequence, the contests for mate- 
rials and other scarce items were not al- 
ways confined to Army versus Navy or 
even military versus civilian orders but 
also included domestic versus foreign or- 
ders. And in some instances, where a 
manufacturer held orders from all of the 
rival consumers, the contest did not even 
involve different firms but the relative 
priority of orders on the bench within 
a single concern. 

The whole summer and most of the 
fall of 1940 were devoted to the search 
for a workable procedure for dealing 
with priorities to rationalize the scram- 
ble for resources. 42 The task moved 
slowly. In mid-November the officer in 
charge of priorities in OCAC could still 
complain: "An effective system of prior- 



41 Bureau of the Budget, United States at War, 
p. ig. For evidence on significance of airline and 
export orders, see SW to Donald Nelson, 25 Nov 40, 
SW files, Airplanes, and related correspondence filed 
there, especially Memo, CofAC for ASW, 30 Sep 40, 
item 1794; Memo, ASW for Knudsen, 10 Aug 40; 
and Lockheed to ASW, 27 Sep 40, item i860. 

42 A good insight on the problem is contained in 
Chief, Allocation and Priorities Sec, to Tech Exec, 
27 Nov and 4 Dec 40, AFCF 319. i-D. For repre- 
sentative illustrations of the kinds of priority prob- 
lems encountered, see Chief, Facilities Sec, to Stat 
Sec, 7 and 28 Jul 41, same file, 



ity control does not exist." 43 There were 
a number of explanations behind this 
confession. To begin with, the officers 
tackling the problem were but recently 
assigned and the job was novel. There 
were no established routines to pursue. 
This alone might readily account for 
much of the delay, but there were even 
more significant factors involved. Mus- 
tering information from so many diverse 
sources proved hard work. Aircraft and 
component manufacturers were slow to 
submit reports on the tools and materials 
they required, even when they were urged 
to do so. And when they did reply to 
such requests they sometimes submitted 
their data in such a useless or incomplete 
form, requiring follow-up requests for 
more information before the priorities 
committee could act with something ap- 
proximating full information in hand. 
Air Corps contractors, while calling des- 
perately for machine tools, failed to in- 
clude in their requests sufficient informa- 
tion as to the specifications of the tools 
desired or the end products for which the 
tools were to be used. 44 Air arm staff offi- 
cers had to educate manufacturers to ap- 
preciate the importance of, and the real 
need for, backing up their priority claims 
with full supporting data if they hoped 
to receive favorable action from AN MB. 

One explanation for the halting evo- 
lution of an effective priorities system 
may be found in the "business as usual" 
atmosphere that seemed to persist in 
Washington. At least one journalist re- 
peatedly jibed at the "national defenders" 
who "stacked their arms" at lunch until 
three, quit at four-thirty each day, and 

43 Chief, Allocations and Priority Sec, to Tech 
Evec, ao Nov 40, AFCF 319.1 Production Rpt. 
** Ibid. 



ORGANIZING FOR PRODUCTION 



261 



then took Saturday afternoon off. 43 These 
strictures may have been unduly harsh, 
but it was undeniably true that the Air 
Corps was not yet on a war footing ad- 
ministratively, and OCAC had not en- 
tirely shaken off its peacetime routines. 46 
There was yet another consideration 
that tended to retard the air arm in its 
rearmament effort. The headquarters 
organization of the Air Corps, OCAC, 
simply was not geared to the task of mo- 
bilization. Apart from individuals of 
considerable capacity, the organization 
suffered from a want of administrative 
talent. 47 One deficiency in particular 
stands out: the air arm headquarters 
lacked some of the most necessary tools 
of command. Procedures adequate for 
a small peacetime force had become ob- 
solete as the scale of operations mounted. 
As the number of units and items under 
discussion rose from tens and hundreds 
to thousands and tens of thousands, crude 
manual techniques of office routine broke 
down. And at the very moment that offi- 
cials of the newly created NDAC were 



i5 Aviation, October 1940, p. 71, and December 
1940, p. 99. 

46 While individual officers did indeed work be- 
yond duty hours, the fact remains that during the 
fall of 1940, the OCAC working day ran from 8:45 
to 4:15 with a half day on Saturday, and the record 
reveals no civilian employees earning overtime pay. 
See Memo, OCAC for all divisions, 19 Sep 40, and 
Memo, Plans for Exec, 2 Oct 40. Both in AHO 
Plans Div 145.91-246. For evidence on petty peace- 
time restrictions that continued to inhibit operations, 
see, for example, TWX, PES to Admin Exec, OCAC, 
13 Dec 40, VVFCF 111.3 Munitions Program Require- 
ments. 

47 For general criticisms of administrative efficiency, 
see Memo, CofAC for Plans, 8 Apr 40, AFCF 321.9-B; 
R&R, Exec, OCAC, to Chiefs, Mat, Plans, and T&O 
Divs, 17 Oct 40, AHO Plans Div 14.5.91-246; as well 
as Secretary Patterson's postwar reflections on lack 
of "management" in the Air Corps, 6 Dec 45, Pringle 
Papers, i8h. 



seeking statistical data on which to prem- 
ise major plans, air arm officials were just 
beginning to use machine record tabula- 
tions at OCAC. 48 

If the NDAC was a hastily contrived 
and makeshift organization quite un- 
ready to shoulder the tasks confronting 
it for a long period after its formation, 
almost the same thing could be said of 
such permanent military organizations as 
OCAC and AN MB. For the reasons ad- 
vanced, the processing of priority re- 
quests proceeded at a most painfully slow 
pace. As late as December 1940, not a 
single case of interest to OCAC had even 
reached NDAC; not one had even cleared 
AN MB. 49 

The officer in charge of priorities at 
OCAC put his finger on the heart of the 
matter when he declared that the officials 
of AN MB had "neither the knowledge, 
ability or authority" to cope with the 
priority problem. He was not insulting 
the individuals concerned but apprais- 
ing the situation as it existed. The de- 
lays in AN MB stemmed from the circum- 
stance that the board was attacking prob- 
lems quite beyond its terms of reference. 
The contentions requiring resolution 
were not, as we have seen, limited to 



48 Machine record tabulations had long been used 
in supply operations at Wright Field, but despite 
frequent discussions on the subject from 1938 on, 
little was done in OCAC to provide effective ad- 
ministrative tools of this character until well into 
the war period. See Rpt of special com of Mat Div 
(SO 217), 14 Sep 40, AHO Plans Div 145.91-246, and 
Col Farthing to Col Spaatz, 22 Dec 39, AHO 145.91- 
391. Machine records were first initiated at OCAC 
in November 1940, almost six months after the real 
mobilization began. See, Memo, J. M. Farrar for 
CofAS, 28 Oct 41, AFCF 321.9 AAF Stat Control. 

49 Allocations and Priorities Sec, OCAC, Weekly 
Activities Rpt, 11 Dec 40, AFCF 319.1-D, 



262 



BUYING AIRCRAFT 



those arising between the Army and Navy 
but were conflicts involving domestic air- 
lines and orders placed by the British 
Purchasing Commission (BPC) as well as 
other foreign orders. What was needed, 
the OCAC officer insisted, was a "pro- 
curement priority" to superimpose upon 
the existing system of "military priori- 
ties." While the ANMB could iron out 
conflicts between the military services, it 
was clearly beyond the powers of the 
board to cope with the current difficulty 
since the real rivalry of the moment was 
between the orders of the armed forces 
on the one hand and of the airlines and 
foreign nations on the other. In such a 
situation only a national civilian agency- 
such as NDAC could hope to reconcile 
priority contests effectively. 

Far from trying to enlarge the powers 
of ANMB or the military services at the 
expense of the civilian agency, the air 
arm priorities officer urged that all final 
decisions on priorities should rest with 
NDAC, "the only agency with the neces- 
sary perspective and jurisdiction to con- 
sider the aircraft industry as a unit and 
. . . successfully administer priorities." 
In this proposal he was supported by his 
superiors, who urged that just such a 
course be followed. 30 Indeed, so press- 
ing was the need for a single, strong, 
centralized means of co-ordination and 
control, air arm officials urged the ap- 
pointment of a single head to "adjudicate 
conflicts" currently being encountered in 
the several agencies dealing with air- 
craft production— the Treasury, OCAC, 



90 Ibid. See also, Memo, Asst CofAC for ASW, 
12 Dec 40, Weekly Activities Rpt, 19 Dec 40, AFCF 
319.1-D. 



OASW, the Navy's Bureau of Aeronau- 
tics, the ANMB, and the British Pur- 
chasing Commission, all in addition to 
the Production Division of NDAC. 51 

In the light of subsequent strictures by 
civilian officials in the great mobilization 
effort, it is of interest to note that air arm, 
officers sought to enhance the powers of 
NDAC rather than curtail them. The 
officers did this when they discovered 
anew from experience what they had 
known in theory all along: effective mo- 
bilization of the national economy for 
war is impossible without some form of 
central co-ordination. Co-ordination, 
they came to realize, involves more than 
the mere recording of facts in some cen- 
tral agency. Co-ordination implies a syn- 
thesis or rationalization of strategic plans 
with production schedules, an apportion- 
ment of resources— men, materials, fa- 
cilities, and output— among the various 
claimant groups so as to match in the 
most efficacious way the complex ends 
desired with the limited means available. 
As matters stood, no single agency ex- 
isted that could. provide such a synthesis. 
The semiautonomous commissioners of 
NDAC were certainly not organized to 
do the job. They lacked not only co- 
ordination among themselves but were 
uncertain where their powers began and 
the powers of others left off. 52 Until this 
particular difficulty could be resolved and 
until a truly effective agency for co-ordi- 
nation emerged, the mobilization effort 



51 Memo, Asst to CofAC (Gen Brett) for ASW, 
19 Dec 40; Memo, Asst to CofAC for Gen Marshall, 
19 Dec 40. Both in AFCF 452.1 Airplanes, Gen. 
See also, AC Project Reds (Lyon Papers), bk. 56. 

52 WPB Special Study 3, pp. 1-2. 



ORGANIZING FOR PRODUCTION 



263 



seemed doomed to suffer an endless series 
of inefficient and wasteful conflicts. 53 

The Achievement of Co-ordination 

Although the culmination of the 
mounting demands for an effective sys- 
tem of centralized co-ordination and con- 
trol over the national mobilization did 
not come until December 1940, insofar 
as aircraft were concerned, responsible 
officials had taken a long step in that 
direction months before with the forma- 

for aircraft production. From amidst the 
welter of wartime agencies, this com- 
mittee in particular offers insights of sig- 
nificance into the general problem of or- 
ganizing production in time of national 
crisis. 

Until the President established the 
NDAC, responsibility for co-ordinating 
aircraft export sales with Army and Navy 
procurement rested, in theory at least, 
with the President's Liaison Committee. 
This committee, it will be recalled, re- 
ported through the Secretary of the Treas- 
ury for reasons of political expediency. 
However, since the Treasury was in an 
echelon parallel to the War and Navy 
Departments, the committee faced an in- 
herently impossible task in its effort to 
cope with the rivalry of Air Corps and 
British spokesmen for the lion's share of 
available aircraft output. Far from serv- 
ing as a passive recorder of facts or even 



53 For an insight on the misunderstandings that 
marred the teamwork of the period, see Memo, Esee, 
QASW, for C.of.S, 3 Dec 40, SW files, Airplanes, item 
ic|oi, as well as the retrospective comments of \faj 
Cen J. H. Hums in Memo for M. S. Watson, 90 Fell 
48. OCMH. 



as an impartial arbiter, Secretary Morgen- 
thau became a litigant, in the rivalry,** 

With the formation of the NDAC, this 
anomalous situation began to clear up. 
In July Commissioner Knudsen of the 
Production Division arranged a meeting 
of representatives from the Army, the 
Navy, and the British Supply Council to 
decide upon a slicing of the aircraft pro- 
duction pic. 5S All present agreed that it 
would vastly facilitate aircraft production 
if a single authoritative committee could 
be set up embracing Army, Navy, and 
British members to make binding deci- 
sions on all three parties concerning the 
apportionment of productive facilities in 
the United States, rationalizing the flow 
of materials, and so on. 

While the formal establishment of an 
Army-Navy-British (ANB) committee on 
aircraft was still under discussion, the 
enormous value of such a group was dem- 
onstrated by two steps taken on the basis 
of the informal collaboration already ac- 
complished. The first step took the form 
of a production schedule projected by 
NDAC staff members from the division 
of output agreed upon in July at the 
meeting conducted by Knudsen. This 
schedule spread the aircraft in the cur- 
rent procurement program month by 
month over the next two calendar years. 
For the first time since the beginning of 
the rearmament effort, it was possible to 
plan comprehensively, and individual 
manufacturers could find out what total 

'* Details o£ this difficult situation arc suggested 

ill Watson, Chief of Staff; Prewar Plans and Prepara- 
tions, pp, 305-09, 

5S For an excellent brief account of this meeting 
and the agencies formed as a consequence, see R. D. 
Masters, Handbook of International Organizations, 
Carnegie Endowment ftir International Peace pvfew 
York; Columbia University l*ress, 1945), pp. 149-53. 



264 



BUYING AIRCRAFT 



burden they might be expected to shoul- 
der. For the first time individual manu- 
facturers were able to get a comprehen- 
sive view of their tasks and decide whether 
or not facility expansions would be nec- 
essary. In addition, the month-to-month 
schedule made it possible to order mate- 
rials and component parts on a rational 
basis of scheduled need rather than all 
at once in panic lots that swamped ven- 
dors and suppliers alike. 56 

Meanwhile, at Wright Field the second 
by-product of the ANB meeting in July 
was coming to fruition. Manufacturers 
had repeatedly pointed out that standard- 
ization among Army, Navy, and British 
purchases would pay large dividends in 
production by permitting the use of sin- 
gle assembly lines, longer production 
runs, and lower unit costs. The absurdi- 
ties to which the absence of standardiza- 
tion could lead were perhaps never bet- 
ter demonstrated than in the situation at 
Douglas Aircraft where seven different 
models of the same aircraft, each embody- 
ing minor variations to satisfy different 
customers, were all proceeding toward 
completion simultaneously. 57 

While it was readily apparent to every- 
one concerned that month-by-month 
schedules and standardized designs would 
be a great stride forward in rationalizing 



5 «WPB Special Study 21, p. 35; ARCO Admin 

Office, History of the Aircraft Resources Control 
Office of the Aircraft Production Board and Predeces- 
sor Agencies: May ig40-September 1945 (hereafter 
cited ARCO Hist), 29 Sep 45, p. 4. 

57 Lt Col C. E. Branshaw, resident representative 
at Douglas Aircraft, to Asst Chief, Mat Div, 27 Tun 
40, WFCF 452.1 Standardization of Aircraft. For a 
survey of this topic in general, see USAF Hist Study 
67. Standardization of Air Materiel 1939-1944: Con- 
trols, Policies, and Procedures, Nov 51. See also, 
ARCO Hist, pp. 62-68. 



and thus increasing production, it was 
equally apparent that neither the sched- 
ules nor the standardized designs decided 
upon were decisions that would stay put. 
Each week, even each day, would raise 
new difficulties and introduce new and 
unexpected variables jeopardizing or 
voiding the steps already taken. The 
obvious answer lay in the formation of 
an agency or administrative mechanism 
to continue to make such decisions, re- 
vising the monthly schedules as circum- 
stances dictated and reaching decisions 
on standardization in the case of each 
new item of equipment developed. After 
many conferences and informal meetings 
during the summer of 1940, the organiza- 
tional solution finally contrived was offi- 
cially designated in mid-September as 
the Army-Navy-British (ANB) Purchas- 
ing Commission Joint Aircraft Com- 
mittee. 58 

Formation of the Army-Navy-British 
Purchasing Commission Joint Aircraft 
Committee marked the beginning of a 
genuinely effective system for co-ordinat- 
ing aircraft production in the United 
States. Although the committee repre- 
sented the bulk of the aircraft orders 
currently placed, its membership did not 

M In addition to Handbook of International Or- 
ganizations, and WPB Special Study 21, sec Joint 
Aircraft Committee Organization and Function, 
pamphlet issued 1 Jan 42 by JAC, AFCF 334.8 JAC. 
The long delay in establishing the joint committee, 
23 July to ig September 1940, may have been but 
one of the unfortunate results of the dispute at this 
time between the Air Corps and the Navy over their 
respective aerial functions. See AGO Reds Sec, 
WPD-OPD 3807-41 and 888-103, as well as Memo, 
CofAC for CofS, 3 Jul 40, with related correspond 
ence, AFCF 360.01 B, and Memo, CofAC for CofS, 5 
fun 40, AFCF 321.9-C. For further information on 
the origin of JAC, see AAF Hist Study 6, Distribu- 
tion of Air Materiel to the Allies: 1939-1944, AHO, 
Jul 44, passim. 



ORGANIZING FOR PRODUCTION 



265 



at the start embrace the whole of the na- 
tion's output. In addition to the export 
orders placed by the British and those 
taken over by them when the French 
government fell, there were dozens of 
foreign states placing aircraft orders in 
this country, orders that were still han- 
dled by the Secretary of the Treasury 
through the Liaison Committee. Like- 
wise, orders from the domestic airlines 
fell outside the competence of the com- 
mittee. For all its advantages, the com- 
mittee was not all embracing and could 
not hope to co-ordinate the aircraft pro- 
gram in one grand synthesis. This piece- 
meal assault on the problem could be— 
and subsequently, was— rectified by exec- 
utive action redefining the committee's 
authority to include control over all air- 
craft produced in the United States. 59 
Nevertheless, so long as it continued to 
operate parallel to but apart from the 
NDAC staff, the ANB Committee was 
certain to be of limited value. This be- 
came increasingly evident after a month 
or two of operations and led to agitation 
for recasting the committee with broader 
powers over the aircraft program. 

In every echelon of activity in the na- 
tional mobilization as the fall of 1940 
wore on, responsible officials came to 
recognize the crying need for centralized, 
high-level, decision-making bodies to co- 
ordinate and control the intricate game 
of production currently under way. They 
were beginning to learn from experience 
what they already knew from departmen- 
tal doctrine. Thus it came about that 



59 Memo, ANBPC Jt Com for SW, 5 Nov 40; Memo, 
CofAC for CofS, 22 Nov 40. Both in AFCF 400.174. 
See also, Actg SW to Chairman, President's Liaison 
Com, 20 Nov 40, SW files, Airplanes, item 1885a. 



during December 1940 the various agita- 
tions in military circles for a strong cen- 
tral co-ordinating agency coincided with 
favorable circumstances elsewhere. By 
this time the Presidential elections were 
safely over, and the NDAC had more or 
less completed its shakedown. 

Just before Christmas the President 
took a major step forward when he de- 
cided to establish the Office of Produc- 
tion Management (OPM). fl0 By this move 
he superimposed a co-ordinating agency 
on top of the existing NDAC, absorbing 
virtually all of its functions. This was 
undeniably an awkward arrangement. 
However, the involved considerations in- 
ducing the President to create a form of 
dual leadership with Knudsen and Hill- 
man as director general and associate di- 
rector general have already been sug- 
gested in the discussion of the NDAC, 
and need not be recounted here. 61 It is 
sufficient to note that the formation of 
OPM carried the administration of the 
national mobilization one step nearer to 
a single centralized agency such as the 
War Resources Administration conceived 
by the prewar planners. 

Though not an ideal co-ordinating 
agency, OPM at least offered greater 
possibilities than the loosely contrived 
NDAC. Once the initial confusion ac- 
companying the formation of OPM had 



60 See Executive Order 8629, January 7, 1941, creat- 
ing OPM, in Rosenman, Public Papers and Ad- 
dresses of Franklin D. Roosevelt, IX, 68g, item 154. 
See there also, Administrative order and attached 
note, 7 Jan 41, and item 147, p. 62a, and item 153, 
p. 679, press conferences explaining OPM. 

61 For suggestions on the political problems be- 
hind the formation of OPM, see Bureau of the Bud- 
get, United States at War, pp. 50-55, and Barron's, 
September 16, 1940, p. 4, and November 85, 1940, 
p. 4. 



266 



BUYING AIRCRAFT 



subsided, the Aircraft Section of OPM 
(taken over from the NDAC) was com- 
bined with the existing Army-Navy-Brit- 
ish Purchasing Commission Joint Air- 
craft Committee. The officials of the 
OPM Aircraft Section had the legal re- 
sponsibility for co-ordinating the mobili- 
zation effort in general and the aircraft 
program in particular. Moreover, they 
alone could co-ordinate the aircraft pro- 
gram with the mobilization as a whole 
through the machinery of OPM. On 
the other hand, the ANB Joint Commit- 
tee in its turn was capable of a unique 
contribution too. Its members repre- 
sented three different going concerns. 
Each of these had its long established re- 
lationships with industry, and each had 
its years of accumulated experience. In 
addition, the members of the committee 
either occupied positions high in the 
military hierarchy and near the point of 
effective decision making or enjoyed 
ready access to those who did. Clearly 
the combination of organizations offered 
decided advantages, and on 22 April 1941 
by mutual agreement the interested par- 
ties decided upon just such a move. 82 

The expanded committee, which added 
OPM representatives as voting members 
to the Army-Navy-British Purchasing 
Commission group, styled itself the Joint 
Aircraft Committee (J AC). 63 The two 
War Department members were Maj. 
Gens. Henry H. Arnold and George H. 
Brett. The Navy members were Rear 
Adm. J. H. Towers and Capt. D. C. Ram- 

82 WPB Special Study, si, pp. 14-15. 

63 SW to Gen Arnold, aa Apr 41, AGO Reds, SW 

files, Airplanes. The term Joint was, in the light 
of subsequent developments, rather unfortunate, for 
joint came to be used forArmy-Navy agencies where- 
as the term combined was used for U.S.-British agen- 
cies. 



sey; thus both the Air Corps and the 
Bureau of Aeronautics were represented 
by officers in the top echelon of command. 
The two members from the British Sup- 
ply Council were Sir Henry Self and Mr. 
C. R. Fairey, both from the British Pur- 
chasing Commission, the former an Un- 
der Secretary in the British Air Ministry, 
the latter a well-known British aircraft 
manufacturer. The two members from 
OPM were Mr. Merrill C. Meigs, head 
of the OPM Aircraft Section, and Mr. 
T. P. Wright, whose work in the NDAC 
and OPM had already won him consider- 
able recognition quite apart from his 
reputation in engineering circles. 

By the terms of its organic directive, 
the JAC was put in a position to give the 
aircraft program the kind of co-ordina- 
tion and control it required. The direc- 
tive vested the committee with power to 
schedule all deliveries: Army, Navy, Brit- 
ish, other foreign orders, and domestic 
commercial orders. This included the 
power to schedule the production of com- 
ponent parts as well as end products, and 
the power to make decisions prescribing 
standardization to be binding on all the 
parties concerned. 64 

In practice the mandate of the JAC 
brought several far-reaching results. Dis- 
putes among the several users or agencies 
sharing in the end products could be set- 
tled speedily by frank discussion among 
the principals, who had authority to make 
their decisions binding. 63 This was par- 



's* Ibid. 

65 For illustrative instances of the type of disputes 

confronting JAC, see SW to SN, 8 Mar 41, and JAC 
to CNO and CofS (April 1941), in AGO Reds, WPD- 
OPD 888-103, as well as Chief, Bureau of Aero- 
nautics, to CGAAF, 14 Feb 4a, and Memo, Exec, 
Mat Div, to CofS, 16 Feb 42, AFCF 452.1 Production. 



ORGANIZING FOR PRODUCTION 



267 



ticularly significant in the matter of stand- 
ardiza tion. Having pursued their courses 
independently and freely for many years, 
the Army, the Navy, and the British had 
each evolved numerous items of equip- 
ment along entirely different lines. This 
was especially true with regard to arma- 
ment, communications, oxygen equip- 
ment, and other such accessories. Stand- 
ardization in these areas would require 
great concessions by all if substantial 
gains in the direction of simplification 
were to be attained, and, especially after 
the passage of the Defense Aid Supple- 
mental Appropriation Act in March 1941 , 
standardization was more than ever essen- 
tial if the production authorities were to 
increase output by reducing the number 
of different types of the same item being 
turned out. 86 

Probably no single function of JAC 
was more important than its role in issu- 
ing continual revisions of the aircraft 
production schedule. This the commit- 
tee accomplished by simply revising re- 
peatedly the initial effort NDAC made 
in scheduling. Report 8 on airframes 
was projected through a series of revi- 
sions designated 8A, 8B, through 8L in 
March 1943, when a major recasting took 
place to convert the schedules from a 
"target" basis to a more realistic basis of 
deliveries believed to be possible. Simi- 
lar schedules were extended from the 



66 JAC, Organization and Function, 1 Jan 4a, espe- 
cially exhibit entitled "Organization and Function 
of Working Subcommittee on Standardization of the 
JAC." Typical items standardized, in addition to 
aircraft as such, included: safety belts, seats, pyro- 
technique equipment, spare parts for engines, and 
self-sealing fuel tanks. Mr. T, P. Wright served as 
chairman of this committee throughout the war. 



original NDAC Report 9 on engines and 
Report 10 on propellers. 67 

The three reports and their revisions 
constituted a most useful tool for mobi- 
lization planning and control. All de- 
pended upon these basic schedules. Not 
only were they vital in planning to keep 
each of the three major items— airframes, 
engines, and propellers— in proper rela- 
tion to one another, each schedule also 
provided the directive for an enormously 
complex series of activities following in 
its wake. If, for example, the official air- 
frame schedule called for a monthly rate 
of production that a given aircraft builder 
could not meet, then expansion of facili- 
ties might be required. This would set 
up a demand including such critical items 
as structural steel and machine tools with 
which to equip the new facilities— in ad- 
dition to the raw materials and compo- 
nents required to construct the prescribed 
number of airframes on the basic sched- 
ule. Each such collateral demand— for 
steel, tools, components, etc.— of itself set 
in motion a similar chain of events that 
involved an equally complex set of re- 
sponses. The schedule was the heart of 
an intricate network of impulses. The 
task of the planners and co-ordinators was 
to keep the whole delicate network in 
balance. If combat operations showed 
an aircraft type to be obsolete, it might 
have to be removed from the schedule. 
Or a manufacturer might fail, despite all 
urging and assistance, to meet the output 
prescribed in the schedule. In either 
event the schedule was revised accord- 
ingly. This in turn involved a careful 
reapportionment of all the various types 



6T ARCO Hist, pp. 31-39, and WFB Special Study 
21, pp. 15-22. 



268 



BUYING AIRCRAFT 



of contributory items that were being fed 
toward the end product. Unless these 
items too were diverted and directed into 
useful channels, much of the national 
mobilization effort would be lost. The 
great contribution of JAC stemmed from 
its capacity to make and enforce the de- 
cisions so vital in keeping the production 
schedule sensitively balanced, attuned to 
the facts of the ever-evolving mobiliza- 
tion scene. 

That JAC was a successful agency is 
perhaps best attested by its survival to the 
end of the war. Since it was a successful 
administrative device, it may well justify 
careful analysis. This seems especially 
true inasmuch as the prewar mobilization 
planners never mentioned any organiza- 
tion similar to the JAC. What were the 
peculiar characteristics or features mak- 
ing this unique and entirely unplanned 
agency so useful and so successful in sur- 
viving the periodic reorganizations that 
beset all other wartime agencies? 

The JAC in Retrospect 

One explanation of the survival and 
effective operation of JAC during the 
war years can be found in its stature. The 
agency was established high enough in 
the chain of command to speak with au- 
thority. Its decisions were binding. But 
this very advantage carried with it an in- 
herent disadvantage, for the higher one 
goes in the echelons of command, the 
further one gets from the facts of the case. 
As one mounts further and further from 
the level of day-to-day operations, the 
more difficult it becomes to secure the 
information so necessary in making sound 
decisions. While it is all very well to cre- 
ate an agency at the highest echelon to 



speak with authority, the decisions of 
such an agency are no better than the 
facts and figures fed to it. This problem 
—the fundamental need for a close re- 
lationship between the decision-making 
and the operating echelons— was recog- 
nized by a number of experienced air 
arm officials. Some, indeed, were only 
too well aware of the frustrating isolation 
that beset "desk" officers in Washington 
remote from the engineers at Wright 
Field. 68 Although the special circum- 
stances that separated the Washington 
headquarters from the materiel functions 
at Wright Field made this a particularly 
difficult matter for the air arm, the prob- 
lem applied to any hierarchical organi- 
zation, 69 

The Joint Aircraft Committee was no 
exception to this general rule. It had to 
face the fundamental problem of how an 
agency can keep its head in the upper 
stratosphere of command and still retain 
its feet upon the solid ground of fact de- 
rived from a working familiarity with 
operations at the grass-roots level. Broad- 
ly speaking, the solutions JAC contrived 
involved two separate administrative de- 
vices. 

The first administrative mechanism to 
be tried was the "working subcommittee." 
For this device there was ample precedent 
in the experience of the Joint Board, 
which for years had freed its high-rank- 
ing members from well-nigh impossible 
burdens by assigning most if not all of 
the staff papers to working parties of 

68 For pointed illustrations, see IOM, Chief, Mat 
Div, for CoEAC, 13 Sep 39, AFCF 321.9 Mat Div Or 
ganization; and Memo, ACofAS, MM&D, for CGMC, 
4 Jun 45, AFCF 452.01B Production. 

^ANMB, for example, encountered much the 
same sort of difficulty. See Secy, ANMB, to CofAC, 
10 Sep 40, AFCF 334.7 ANMB. 



ORGANIZING FOR PRODUCTION 



269 



younger officers. Thus, JAC appointed 
subcommittees on allocations, standardi- 
zation, and so on, with appropriate sub- 
groups specializing in everything from 
armor plate to windshields. The sub- 
committees, of course, could be no better 
than the talent serving them, so in the 
composition of these working parties lay 
the success or failure of the device. But 
here lay the rub. To transplant a well- 
informed engineer from Wright Field to 
Washington was to cut him off from the 
roots that continuously nourished him 
with new information— precisely the in- 
formation that made him valuable to the 
committee. This difficulty was resolved 
by the use of visiting witnesses, experts, 
project engineers, and the like, men thor- 
oughly familiar with their own special- 
ties, who could be called in to give evi- 
dence before the committee when needed 
but not kept so long as to remove them 
from intimate contact with their work. 70 
Insofar as the problem of standardiza- 
tion was concerned, JAC successfully 
blended the authority of high rank with 
the technical ability of specialists by the 
use of visiting experts, but in the matter 
of scheduling and allocation somewhat 
different techniques were required. The 
compilation of accurate production sched- 
ules projecting many months into the fu- 
ture depended more upon the realism of 
the estimates supplied by the manufac- 
turers than upon the technical skill of 
individual witnesses before JAC or its 
subcommittees. In July 1943, for exam- 

70 For insights on some of the problems involved in 

the use of expert witnesses before the working sub- 
committees of JAC, see IOM, Asst Exec, Mat Div, 
OCAC, for Tech Exec, WF, 21 May 41; Chief, Engr 
Sec, Mat Div, OCAC, to Chief, PES, WF, 28 Aug 41; 
and IOM, Chief, PES, for CGMC, 28 Mar 42. All 
in AFCF 334.8 JAC. 



pie, JAC received information to the ef- 
fect that the Fisher long-range fighter, 
P-75, anticipated the following produc- 
tion in 1944: 1 unit in May, 10 in June, 
50 in July, 100 in August, 175 in Sep- 
tember, and 250 in October. 71 If this 
projection was accepted by the JAC 
scheduling subcommittee, a whole se- 
quence of correlated factors would be 
set in train: an appropriate number of 
Allison V— 3420 engines would have to 
be earmarked to meet this schedule as 
well as propellers, landing gears, and 
hundreds of other components, accesso- 
ries, and materials. As it turned out, the 
P-75 never emerged from the test stage, 
let alone reached full production. 72 To 
have scheduled the flow of vast quantities 
of materials for the P-75 would have im- 
paired the war effort by diverting scarce 
resources into what turned out to be a 
dead-end road. Clearly the schedule 
makers could be no more accurate than 
the data received by them. And it was 
realization of this circumstance that led 
JAC to its second solution for keeping 
its feet on a firm foundation of accurate 
information. 

Besides authorizing the use of expert 
witnesses, the directive establishing JAC 
also provided for the formation of a work- 
ing echelon, the Air Scheduling Unit 
(ASU), at Wright Field. The ASU was 
to serve as a central clearinghouse for 
information from the industry to JAC 
and from JAC to the industry. 73 The 
directive did not devise the scheme of 

"Memo, ACofAS, MMH), for JAC, si Jul 43, 
AFCF 452.01B Production. 

73 Army Aircraft Model Designation, June 1946, 
pp. 76-79. Total number procured (of 2,500 on pro- 
duction contract) was six. 

73 SW to Gen Arnold, 22 Apr 41, SW files, Air- 
planes. 



270 



BUYING AIRCRAFT 



the working echelon for JAC but merely 
took official cognizance of an arrange- 
ment that had been in operation for some 
time. Like JAC itself, the Air Scheduling 
Unit was not planned; it grew out of the 
accidents of circumstances. 

When the President replaced the 
NDAC with OPM during January 1941, 
the civilian officials charged with co-ordi- 
nating aircraft production realized the 
futility of trying to perform the mass of 
detailed work on production co-ordina- 
tion with a yet-to-be-recruited staff in 
Washington when the Air Corps already 
had a trained staff doing this very type 
of work at Wright Field. Discussion was 
still under way on a plan to establish a 
working echelon for OPM at Wright 
Field when in February 1941 a directive 
from Knudsen, the new director general 
of OPM, ordered the Aircraft Section 
(OPM) to utilize the existing Production 
Engineering Section of the Air Corps' 
Materiel Division at Wright Field as a 
working staff and point of contact with 
the industry. By April it had become 
apparent that even with the best will in 
the world, an air arm monopoly in the 
flow of information to the Aircraft Sec- 
tion of OPM as well as to JAC was hardly 
conducive to the ideal of impartiality. By 
mutual agreement, therefore, the existing 
unit, the Air Scheduling Unit of the Pro- 
duction Engineering Section at Wright 
Field, was modified to serve the several 
contending interests of the Washington 
echelon— the Army, the Navy, the Brit- 
ish, and OPM— by adding representatives 
from the parties involved, 74 

In practice the modified ASU was a 
board of three officers, Army, Navy, and 

7 *WPB Special Study si, pp. 16-19. 



British, along with an OPM representa- 
tive. These men together served as a 
field staff (for JAC as well as OPM) recon- 
ciling conflicts whenever possible with- 
out reference to Washington. Of course, 
three or four officials in Ohio were no 
more capable of handling the vast array 
of details— surveys, allocations, etc.— in- 
volved in scheduling the aircraft program 
than were three or four officers sitting 
in Washington, even if those in Ohio 
were nearer to the vital source of infor- 
mation. The ASU had to rely upon the 
existing staff services of the Air Corps 
Materiel Division at Wright Field. By 
the end of 1941 more than 100 officers 
and 800 civilians at the Materiel Com- 
mand headquarters were employed in 
executing the mechanical details of sched- 
uling: assembling bills of materials, com- 
piling flow charts and delivery schedules, 
reconciling conflicts, and adjusting other 
difficulties. In 1942 more than 3,000 
civilian and military personnel, includ- 
ing both Army and Navy officers, were 
absorbed in this work. 75 

The task performed for ASU was truly 
staggering. There were some 6,000 or 
7,000 different types of end items to 
handle. These involved more than 9,000 
different bills of materials, any one of 
which might embrace from one to liter- 
ally hundreds of different types of com- 
ponents and basic raw materials. 76 All 
the items and quantities had to be coded 



75 Col W. S. Cave, RAF, British History of the 

Aircraft Scheduling Unit, May 45, copy in ICAF 
Library, pp. 5-6. This historical sketch, including 
illustrative supporting documents, gives an excellent 
cross section of the ASU in operation. Colonel Cave 
was the British representative on ASU throughout 
its life. 



ORGANIZING FOR PRODUCTION 



271 



and carded for machine records tabula- 
tion. Then, when total requirements 
had been compiled— for any given mo- 
ment and always subject to major change 
—the gap between need and available 
supply had to be reconciled in terms of 
the end item preferences laid down in 
JAC directives, by whatever expedients 
seemed best. Sometimes ASU would di- 
vert a shipment of materials or compo- 
nents from one user to another to meet 
a temporary crisis, arranging meanwhile 
to "repay" the loan in the next shipment. 
Sometimes ASU "borrowed" components 
already delivered and in stock at one end- 
product assembly plant and "loaned" 
them to another similar end-product 
plant to prevent impending stoppages 
along the assembly line. On at least one 
occasion an ASU agent broke up an im- 
pending shortage by pleading success- 
fully with an alcoholic diemaker to stay 
sober just long enough to finish the criti- 
cal item he had in hand. 77 

In general, the technique of ASU 
was informal. Staff members worked by 
phone, telegram, letter, or personal visit 
to arrange ad hoc adjustments, based on 
the willing co-operation of the parties 
concerned. Only as a last resort, in about 
one case in a hundred, was it necessary 
to employ mandates, formal compulsory 
directives binding under law. 78 Surely, 
here was impressive evidence of the pa- 
triotic spirit of the nation's often ma- 

76 The Air Scheduling Unit, prepared under direc- 
tion of Brig Gen E. W. Rawlings, Sep 45, in Pringle 
Papers, OCMH, p. 6. 

77 For an excellent account of ASU in operation, 
supplementing Colonel Cave's account mentioned 
above, see History of Navy Membership in the Air- 
craEt Scheduling Unit, 1941-1945 prepared by the 
Bureau oE Aeronautics representative on ASU, Jun 
45- 

78 Cave, British Hist of ASU. 



ligned businessmen. Shortages needing 
relief frequently ran to more than 1,000 
a month. Between 1942 and 1945 ASU 
received formal requests for assistance in 
reducing 50,000 bottlenecks, and this fig- 
ure ignores entirely an unknown num- 
ber of informal requests. 79 

Accident and chance played a large 
part in the evolution of the Air Sched- 
uling Unit. The name itself tells the 
story. What started out as a unit within 
a branch of a section in the Air Corps' 
Materiel Division ultimately became an 
international or combined Army-Navy- 
British and OPM agency for adjusting the 
flow of materials for an aircraft program 
involving literally dozens of claimant na- 
tions on a worldwide basis. In a sense, 
the story of ASU is the story of JAC. 
Neither was planned; both evolved. They 
were the expedient outgrowth of experi- 
ence—men groping pragmatically until 
they hit upon workable and successful 
organizations to cope with situations con- 
fronting them. 

To call JAC a success is to oversim- 
plify. This device of command did in- 
deed work and on the record worked 
well. But if administrative history is to 
have any real meaning, it would seem to 
be of more importance to know why JAC 
worked well than to sing in praise of its 

79 The ASU, p. 5. History of Navy Membership 
in ASU gives the following breakdown of 47,000 
critical shortages mentioned on page 18: 56 percent 
concerned materials and 44 percent concerned com- 
ponents. Of materials, 21 percent were in steel, 22 
percent in aluminum, 9 percent in other nonEerrous 
metals, and 4 percent in nonmetallic items. OE air- 
craft components, 23 percent were in bearings, 
pumps, valves, fittings, etc.; 13 percent were in elec- 
trical equipment; 3 percent in landing gear; 2 per- 
cent in engine accessories; and 3 percent in radio 
and instruments. This sample was taken aEter 
February 1943 and thus does not accurately reflect 
the whole war period. 



272 



BUYING AIRCRAFT 



accomplishments. The individuals who 
served on the committee deserve full 
credit for their contribution to whatever 
effectiveness it may have had, but, in at- 
tributing achievements to the men in- 
volved, it is possible to overlook the part 
played by the conditioning circumstances 
—the organizational structure and proce- 
dures that gave scope to and made pos- 
sible the work they did. In other times 
chance will place different men in these 
or similar roles, and the varying abilities 
of those who served in the past will be 
of far less moment than the historical 
record of the organization in which they 
served. 

The Joint Aircraft Committee bridged 
the gap between the authority of high 
command on the one hand and on the 
other the familiarity with technical de- 
tails found in the operating echelons. 
This it did by a series of administrative 
devices: working subcommittees, visiting 
experts, field parties with delegated pow- 
ers, and so on— each evolved in practice. 
Sometimes the evolutionary process was 
halting and painful. There were stresses 
and strains, not to mention repeated mal- 
functionings. As rival interests jockeyed 
for power there were personality clashes 
and instances of acute interservice com- 
petition against and amongst the repre- 
sentatives of JAC. 80 On occasion the 

80 For an example of the political hazards encoun- 
tered by JAC, see Memo, Maj Timberlake for Col 
Meyers, 10 Oct 41, and Gen Arnold to Senator Lister 
Hill, 14 Oct 41, AFCF 334.8 JAC. For an example 
of personality conflicts, etc., see Memo, Rear Adm 
R. Davison lor Brig Gen G. E. Stratmeyer, 19 Mar 
43, with related correspondence, AFCF 334 JAC. 
For examples of the tendency of various claimants to 
seek membership on JAC, see Brig Gen B. E. Meyers 
to Dir, Gen Dept of Munitions and Supply (Canada), 
19 Sep 42, and CGASC to CGAAF, 30 Jan 43, with 
Inds, AFCF 334 JAC. 



whole mass of paper in the JAC mill 
seemed to lag and accumulate in hope- 
less confusion. 81 Yet out of all this there 
emerged an effective tool of administra- 
tion. Moreover, at least some of those 
in positions of authority actually did 
garner significant lessons from this ex- 
perience, as subsequent events were to 
demonstrate. 

After Pearl Harbor the more central- 
ized War Production Board (WPB) re- 
placed the OPM, but through most of 
1942 this change had little direct effect 
upon the organization for aircraft pro- 
duction beyond alterations in terminol- 
ogy. During the fall of 1942, however, 
the continuing gap between the vast pro- 
grams of aircraft production planned and 
the disappointing level of output on the 
assembly lines led to an agitation for 
reform. 82 

As chairman of WPB, Donald Nelson 
was inclined to attribute much of the 
trouble to the existing administrative 
system. Whatever his intentions were, 
in air arm circles they were regarded as 
an effort to build up a Washington staff 
—perhaps in the nature of a Ministry of 
Supply— to replace that already function- 
ing at Wright Field. General Arnold's 
memory extended back to World War I 
when a similar concentration in Wash- 
ington was tried with results that were 
unimpressive if not disastrous. In the 
light of this experience, he pointed out 



81 Memo, Deputy Recorder, JAC, for Chairman, 
Subcom on Production Programs, s6 Apr 43, AFCF 
334 JAC. For a typical example of the grist in the 
JAC mill, see Memo, Actg CofAC for CofAAF, 31 
Dec 41, AFCF 334.8 JAC. 

82 ARCO Hist, pp. a i-23. 



ORGANIZING FOR PRODUCTION 



273 



certain fundamental weaknesses in the 
Nelson scheme: a board such as the one 
that seemed to be proposed could speak 
neither authoritatively for command, as 
could JAC, nor could it possess the 
knowledge of technical details available 
toASU. 83 

General Arnold must have placed his 
shots well; in the subsequent reorganiza- 
tion of the aircraft production organiza- 
tion, the features he had identified as 
essential were retained. The Joint Air- 
craft Committee remained intact. And, 
although the Aircraft Branch of WPB 
was abolished, its functions were absorbed 
by the newly created Aircraft Resources 
Control Office (ARCO), which served as 
a secretariat or working party for the Air- 
craft Production Board (APB) established 
within WPB as the top decision-making 
and co-ordinating agency for air materiel. 

Significantly, both of the newly estab- 
lished agencies, APB and ARCO, made 
use of the principles for which General 
Arnold had argued. As soon as it was 
set up, ARCO delegated most of its oper- 
ations to the ASU at Wright Field, which 
continued operating as if no change had 
occurred. Equally revealing was the 
composition of the new Aircraft Produc- 
tion Board. It mirrored the pattern 
found successful in JAC and drew its 
members from the ranks of officials in the 
highest echelons, both military and ci- 
vilian, who could speak with informed 
and decisive authority— men who knew 



what they were talking about and had 
the power to act. 84 

Not least among the external factors 
contributing to the effectiveness of the 
new machinery for co-ordinating aircraft 
production was the physical location of 
the offices involved. Whereas the origi- 
nal Aircraft Branch of WPB had been 
housed in the Social Security Building, 
where Mr. Nelson had his headquarters, 
the reconstituted Aircraft Board and its 
administrative offshoot, ARCO, were 
moved into the Pentagon. This greatly 
facilitated dealing with military procure- 
ment officials. At the same time, there 
was no loss of contact with WPB, for the 
chairman of the Aircraft Production 
Board, Mr. C. E. Wilson, was also vice 
chairman of WPB. 

Thus, by the end of 1942, when the 
penultimate aircraft production reorgan- 
ization took place, insofar as air materiel 
output was concerned the agencies for 
controlling and co-ordinating production 
had been hammered into a rough approx- 
imation of what the mobilization plan- 
ners had recommended for many years 
during peacetime. To be sure, the ac- 
tual forms of the organizations finally 
contrived were certainly unlike anything 
visualized by the prewar planners, but 
the principles underlying them were 
essentially traditional: centralization of 
authority for co-ordination and decision 
and decentralization of operations in or- 
der to leave the technical details in the 
hands of those familiar with them. 



83 CGAAF to Donald Nelson, 2s Nov 4s, AFCF 
452.01A Production. 



84 ARCO Hist, pp. 23-30, as well as British and 
Navy histories of ASU cited. 



CHAPTER XIII 

Legislation for Procurement 



Wartime Buying With 
Peacetime Laws 

The Problem: Inadequate Laws 

At the momentous White House meet- 
ing of November 1938 the Administra- 
tion turned a corner in policy and de- 
cided upon aerial rearmament. 1 At that 
time the President called for 10,000 air- 
craft in two years' time. This Executive 
pronouncement stirred up a flurry of 
planning activity in Air Corps and War 
Department circles as crash programs 
were concocted to meet the new target 
figures. And in short order the major 
obstacle blocking completion of the Pres- 
ident's bold new program became all too 
evident. 

To procure 10,000 aircraft in the 
United States— or even half that many— 
within the two years prescribed was pat- 
ently impossible if the War Department 
were constrained to use the forms of 
competition prescribed by law and by 
administrative ruling. 2 Under the pre- 
vailing system of competitive procure- 
ment evolved during the thirties, con- 
tracts for production quantities of air- 
craft were awarded to the manufacturer 
who submitted the best sample aircraft 



1 See above, |ch. VIII.| 

3 Memo, CofAC for ASW, 28 Feb 39, AFCF 452.1 
Proc of Aircraft. See above, chs. |iv| and |v!] 



in an open competition involving adver- 
tising for bids months in advance, the 
laborious fabrication of samples to be 
submitted, a careful evaluation of these 
samples, and, finally, the drafting of con- 
tracts with the winning manufacturer in 
each competition. This process may 
have been scrupulously fair and quite 
above reproach politically, but it was 
time consuming. Moreover, it led to a 
well-nigh fatal concentration of business. 
Who won the competitions? Presuma- 
bly the most efficient manufacturers. 
The rearmament program had no sooner 
got under way than it became clear that 
the bulk of the production contracts was 
concentrated in the hands of three or 
four firms who soon had more work than 
they could handle. To deliver within 
the two-year program period these firms 
would have to expand their facilities. 
But meanwhile more than a dozen air- 
craft manufacturers, the losers, were con- 
fronted with empty factories and idle as- 
sembly lines for want of aircraft orders. 
Unless some means could be found to 
circumvent the requirements on com- 
petitive bidding, it would be impossible 
to meet the President's target figure in 
time. 

The laws governing aircraft procure- 
ment were peacetime laws hardly suited 
to an emergency situation with its crash 
programs seeking overnight results. The 



LEGISLATION FOR PROCUREMENT 



275 



normal, legally prescribed procedure, for 
example, stipulated that advertisements 
for competitive bids had to be carried 
in three leading aviation journals invit- 
ing returns in ninety days. When Air 
Corps staff officers tried to carry out the 
President's hurry-up program during Feb- 
ruary and March 1939, they discovered 
that aeronautical journals as well as air- 
craft manufacturers had to have lead time. 
Not until the issues of the following 
month could they insert their invitations 
to bid, and this would mean that bids 
would return no sooner than the follow- 
ing July. 3 The forms of law were geared 
only to the needs of peace. As a conse- 
quence, Air Corps attack bombers, a type 
in which the air arm was sadly deficient 
at the time, even if promptly procured 
with funds from fiscal year 1939, would 
not be delivered until July 1941, two 
years hence. 4 

If the President's instructions were to 
be carried out, Air Corps officials had to 
find some way to circumvent the obsta- 
cles in the law and spread the production 
load over the entire aircraft production 
capacity of the nation. 5 Their first effort 
in . this direction was to scan the language 
of the existing laws themselves in the 
hope of finding some loophole to cope 
with the situation. Sure enough, the leg- 
islators had anticipated exemptions and 
deviations under certain circumstances. 
The Defense Act of 1920, for example, 

3 Memo, Dir, Current Proc, OASW, for Cof AC, 4 
Mar 39, SW files, Aircraft, item 1107. 

4 Memo, Gen Arnold for SW, 20 Oct 38, AFCF 
452.1. 

5 For a detailed argument on the need for spread- 
ing the work load across the productive capacity 
available, see Memo, Exec, OCAC, for ASW, 13 Mar 
39, AFCF 452. 1-1 gE, Proc of Aircraft. See also, 
Memo, CofAC for ASW, 24 Oct 38, same file. 



authorized the Secretary of War to pro- 
cure by direct negotiation, without re- 
gard to the usual statutes calling for com- 
petition, "in time of war or when war is 
imminent." This would seem to pro- 
vide just the authority desired. Unfor- 
tunately, this convenient escape route 
was blocked as a solution to the problem. 
An old opinion of the Attorney General 
held that "emergency" procurement for 
a time when war was "imminent" could 
only be construed to mean "unantici- 
pated" procurement. Since the Presi- 
dent's 10,000 aircraft program was hardly 
unanticipated, this door was closed. 6 Sim- 
ilar restrictions blocked all practical use 
of the escape clause in Revised Statute 
3709 which stipulated the general use of 
competition in government procurement. 
Here too accretions of legal barnacles 
vitiated the clear intent of the laws when 
the emergency the lawmakers had antici- 
pated finally did arrive. 7 

Inasmuch as the procurement laws ap- 
peared to offer no obvious or convenient 
loopholes, Air Corps officers had perforce 
to cast about for alternatives. It might 
be possible, they believed, to attain the 
ends sought by administrative action 
within the existing laws. With this in 
mind officials at Wright Field turned to 
the Air Corps Act of 1926 and dusted off 
the long unused device of the design com- 
petition authorized in Sections 10a to loi. 
The use of a design competition gave the 
War Department a good deal of latitude. 



fi Memo, W. M. Reading for Gen Arnold, 21 Oct 
38, and unsigned Memo (not sent) for JAC, 22 Oct 
38. Both in AFCF 452. 1A Proc of Aircraft. See 
National Defense Act of June 3, 1916, as amended 
June 4, 1920, sec. 120. 

7 Service Sec, Proc Div, ATSC, Prewar Procure- 
ment by the Air Corps, p. 18. 



276 



BUYING AIRCRAFT 



Not only did it shorten the time for 
opening bids but it also authorized direct 
negotiations with more than one man- 
ufacturer on production contracts under 
certain circumstances. However, by no 
stretch of the imagination was the design 
competition a panacea. Design compe- 
titions in 1939 and 1940 were sure to 
suffer from the same faults that led to 
their abandonment before. Instead of 
buying a known product, a sample air- 
craft reduced to practice, with the design 
competition the Air Corps would be buy- 
ing a paper promise to perform that 
might or might not turn out satisfac- 
torily. 8 And what is more, even when 
using a design competition a firm already 
filled beyond capacity with production 
orders might well win the contest. 

The Solution: New Legislation 

When War Department officials and 
Air Corps officers failed to solve their 
problem either within the existing stat- 
utes or by administrative action, they 
concluded that there was only one course 
left open. They would have to seek 
new legislation from Congress authoriz- 
ing them to abandon competition in air- 
craft procurement during the current 
emergency. With new legislation such 
as this, they could negotiate directly with 
manufacturers at will, placing contracts 
wherever the exigencies of the situation 
and the availability of capacity dictated. 

In short order the headquarters paper 
mill began to grind out draft bills, offi- 
cers in OCAC as well as OASW and the 



s Memo, CofAC for ASW, 22 Mar 39, AFCF 452.1 
Aircraft Requirements Program; and Immediate Ac- 
tion Letter, Chief, Mat Div, to CofAC, 22 Mar 39, 
AFCF 452.1-13E Proc of Aircraft. 



Army JAGO contributing. The final 
version stated in part: 9 

. . . hereafter, whenever the Secretary of War 
. . . determines such action to be in the pub- 
lic interest, he may in his discretion, in addi- 
tion to any other method prescribed by law, 
purchase . . ., with or without competition, 
such aircraft, aircraft parts, aeronautical 
equipment, or aeronautical accessories from 
such sources as he may elect. . . . 

But almost as soon as this proposed bill 
was polished to a proper finish, War De- 
partment officials began to have sober 
second thoughts about the wisdom of 
putting it into congressional hands. Any 
attempt to introduce novel legislation, 
however desirable, might well open the 
gate to congressional tampering with 
some of the most useful aspects of the ex- 
isting laws, notably section 10k of the 
Air Corps Act. In fact, some congress- 
men had already done just what air arm 
officers most feared: proposed legislation 
that in curing one complaint would cause 
a whole new sequence of ills by introduc- 
ing violent changes in the existing scheme 
of statutes. 10 Moreover, as air arm repre- 
sentatives discussed their proposal on the 
Hill, they discovered that congressional 
sentiment was cool indeed to the whole 
idea of negotiated contracts. There were 
a number of factors that seemed to have 
helped in shaping congressional opinion 



» Memo, Dir, Current Proc, OASW, for JAG, 12 
Nov 38, and 1st Ind, JAGO to ASW, 18 Nov 38, Army 
AG Gen Reds Sec 400.12 (18 Nov 38); Memo, CofAC 
for CofS with Incls, 14 Dec 38, AFCF 030 President 
and Congress; Memo, Col Warren for CofAC, 2 Mar 
39, AFCF 452.i-igE Proc of Aircraft. 

10 H.R. 3804, introduced February 7, 1939, 76th 
Congress, 1st session, for example, would have im- 
periled Section 10k of the Air Corps Act. See draft 
of SW to Representative May, Chairman, House Mili- 
tary Affairs Com, 16 Mar 39, AFCF 032 Air Corps 
Act and Amendments. 



LEGISLATION FOR PROCUREMENT 



277 



on the subject of negotiated contracts. 
In part, faith in competitive bidding was 
a product of the general congressional 
climate prevailing ever since the sensa- 
tional hearings of the middle thirties. 

Another circumstance that may have 
helped to shape opposition on the Hill 
was the fact that the aircraft manufac- 
turers themselves, speaking through the 
Aircraft Chamber of Commerce, were 
opposed to abandonment of the estab- 
lished principle of competition in quan- 
tity procurement of aircraft. Several con- 
siderations were present to motivate such 
a seemingly contradictory stand taken by 
the manufacturers, many and even most 
of whom did not hold production con- 
tracts for military aircraft. To begin 
with, President Roosevelt's scheme for a 
series of air arsenals or government- 
owned facilities to provide standby ca- 
pacity against any sudden demand for 
output in war frightened many manufac- 
turers. 11 To some, no doubt, this reeked 
of socialism; even for less doctrinaire 
partisans any such plan spelled trouble 
in the form of increased competition in 
a business already subject to periods of 
feast and famine. 

Even if the President did not press his 
air arsenal idea, a very similar threat had 
appeared in another quarter. This was 
a Senate bill proposing the establishment 
of an Aviation Engineering Center, a sort 
of aircraft TVA to be used as a yardstick 
on costs in the aircraft industry. 12 This 
project, a hardy perennial in Congress, 
was quite sufficient to intimidate the in- 



11 See above, |pp. 177-791 

12 H.R. 5197 and S. 1738, 76th Cong, 1 sess. See 
also. Senate Military Affairs Com, Hearings on S. 
1738 to establish a military aircraft engineering cen- 
ter, April 7, 1939. 



dustry at large. There was little need to 
fear that undue profits would be exposed 
for few if any manufacturers in the indus- 
try were so fortunate as to enjoy them, 
but all knew, as one journalist expressed 
it, that any government yardstick would 
never be 36 inches long. 13 The aircraft 
manufacturers took the only course that 
seemed open to them. They climbed on 
the congressional bandwagon and signed 
the pledge as faithful believers in the 
higher virtues of good old-fashioned com- 
petition—among themselves, that is, and 
not between privately owned and govern- 
ment-owned facilities." 

Under the circumstances, air arm staff 
planners realized there was little hope for 
the legislation they proposed. The War 
Department bill, which would have au- 
thorized the placement of contracts with- 
out competition, was filed away in the 
traditional departmental pigeonhole un- 
til Congress in general, and the House 
Military Affairs Committee in particular, 
adopted a more receptive mood. 15 

Without the amelioration expected 
from new legislation authorizing negoti- 
ated contracts, the troubles of the Air 
Corps continued to mount. Moreover, 
each temporary and expedient improvi- 
sation failed, as had makeshift arrange- 
ments in the past. Which is to say, be- 
cause the Air Corps lacked the power to 
place contracts rationally, where capacity 
was available, business continued to con- 
centrate in the hands of those few firms 
that won in open competition. In a total 



14 Stubblefield, "Washington Win dsock," Aviat ion 
(August 1939), p. 53. See also above fpp. 124-26.! 

14 J. H. Jouett for ACC to ASW, 1 Feb 39, with 
Incls, AFCF 030 President and CongTess. 

1 5 R&R, Supply Div to CofAC, 17 Feb 39, cited 
in AAF Hist Study s>s>, p. 65. 



278 



BUYING AIRCRAFT 



of 537 pursuit aircraft for which funds 
were available, the necessity of awarding 
contracts competitively brought the ap- 
parently inevitable result: a single manu- 
facturer won the competition and re- 
ceived orders for 524 of the 537 to be 
purchased. Yet on every hand rival man- 
ufacturers—the losers— continued to stare 
at virtually empty factories and silent 
production lines. 16 

Air Corps attempts to ease the situation 
by awarding service test contracts helped 
to distribute the load somewhat. Service 
test aircraft were classified as experimen- 
tal items and could be purchased without 
competition under Section 10k of the Air 
Corps Act. At best, however, this remedy 
had only limited utility since, under the 
prevailing legal interpretation of Section 
10k, not more than fifteen aircraft of any 
one type could be purchased in this man- 
ner. 17 Nevertheless, even an order for 
fifteen items was helpful in encouraging 
manufacturers to get production under 
way. 

For a brief period during the fall of 
ig3g air arm officials believed they had 
stumbled upon an ingenious solution for 
their difficult problem. They hoped they 
could avoid the time-consuming delays 
encountered in awarding contracts only 
through competition by the simple ex- 
pedient of exercising options on those 
contracts, extending the number of items 
to be purchased as desired. Here again, 
unfortunately, the law stood in the way. 
The prevailing ruling held that options 
could not be extended endlessly, even if 



10 Co£AC to ASW, 8 Jul 39, AFCF 452.1-13F Proc 
of Aircraft. 
« Ibid. 



the bidders were willing— which was not 
always the case. 18 

One after another the various admin- 
istrative expedients failed. At last it be- 
came apparent that a trip up to the Hill 
could no longer be delayed. If Army 
airmen were to be provided with ade- 
quate air power in the current emergency 
—in quantity and on time— remedial leg- 
islation would have to be sought no mat- 
ter how dangerous such a step might be 
and no matter how unpropitious the cli- 
mate around the Capitol. 

Return to the Hill 

When War Department leaders finally 
decided to secure a revision of the stat- 
utes governing aircraft procurement, they 
planned their maneuver with consider- 
able care. As a first step, they tried to 
persuade Congress that the War Depart- 
ment had no intention of proposing a 
permanent departure from the prevail- 
ing practice of competitive procurement. 
General Arnold let it be known that he 
was deeply attached to the principle of 
competition. He professed to oppose the 
whole idea of negotiated contracts— in 
principle. But as to the present emer- 
gency, that was another matter. With- 
out abandoning one iota of his belief in 
the benefits of competition as a general 
rule, he urged the necessity of deviation 
in time of crisis. The present moment, 
he declared, was just such a crisis. 19 

18 1st lnd, Current Proc Br, OASW, to CofAC, 30 
Sep 39, basic unknown, AFCF 452.1 Aircraft Re- 
quirements Program; P. G. Johnson, of Boeing, to 
J. P. Murray, 19 Mar 40, SW files, Aircraft, item 1454. 

19 See, for example, testimony of Gen Arnold, 
Hearings of Subcom of House Appropriations Com 
on supplementary WD appropriation for 1940, May 
'9. 1939- P- 62. 



LEGISLATION FOR PROCUREMENT 



279 



As a second step in their campaign to 
sell the idea of negotiated contracts to 
Congress, War Department officials had 
doctored the text of their original bill 
to make it more palatable— to congress- 
men if not to the aircraft industry. They 
tacked on a proviso which ostentatiously 
applied the profit limitations of the Vin- 
son-Trammell Act of 1936 to all procure- 
ment that might be effected under the 
proposed measure. 20 Taking the profits 
out of war, forestalling the profiteers, was 
certain to alienate few votes and it might 
go far to dispel any notion that the War 
Department had a sinister purpose in 
mind when it asked for power to negoti- 
ate contracts rather than adhere to the 
tradition of sealed bids. 

As a third step, supplementing the 
other preliminary approaches to the Hill, 
the Assistant Secretary urged the Presi- 
dent to lend the prestige of his backing 
to the measure sought by the War Depart- 
ment. 21 But the President no doubt rec- 
ognized a hot potato when he met one. 
Although he approved the bill drafted by 
the Department, he was apparently un- 
willing to give it his blessing or come out 
publicly and wholeheartedly for it. Jour- 
nalistic scuttlebutt at the time hinted 
that the President's reluctance stemmed 
from his unwillingness to contradict him- 
self; having used General Foulois and his 
negotiated contracts as a scapegoat in the 
airmail and aircraft procurement hear- 
ings of the middle thirties, it was sug- 
gested, he was now unwilling to ask for 



20 Memo, Col Warren for CoEAC, 2 Mar 39, AFCF 
452.1-13E Proc of Aircraft. 

21 Memo, Dir, Current Proc, OASW, for ASW, 8 
Jul 39, with inclosed drafts of letters for President 
to sign, AFCF 452.1-13F Proc of Aircraft. See also, 
AAF Hist Study 22, p. 69. 



the power to negotiate that he had so re- 
cently criticized. 22 Whatever his motives, 
the President gave the bill no special 
backing. 

With all the preliminaries out of the 
way, War Department officials in July 
1939 hopefully sent their bill to the 
Hill. 23 There it made no headway at 
all. This was not surprising in view of 
the long prevailing mood of Congress. 
Even the doctored version of the bill 
failed to excite any enthusiasm in the 
House Military Affairs Committee. The 
committee members, no less than the 
President, were well aware of the attitude 
of Congress on the question of negotiated 
contracts. Confronted with the chill re- 
ception at first base, the staff officers rid- 
ing the bill lost no time in bemoaning 
its fate. They knew the measure would 
never carry, so they returned to the task 
with a compromise, a bill drafted along 
entirely different lines. 24 

The new proposal did not ask Congress 
to grant the War Department what mili- 
tary officials really wanted and needed, 
that is, blanket authority to negotiate air- 
craft contracts at the Secretary's discre- 
tion and without resort to competitive 
bidding. Instead, it called for competi- 



22 Stubblefield, "Washington Windsoclc," Aviation 
(September 1939), p. 53. 

2S The bill was introduced by Representative May, 
Chairman of the House Military Affairs Com, as 
H.R. 7m, 76th Cong, 1st sess, July 10, 1939. 

24 The new bill, sponsored by Representative Dow 
Harter of Ohio, was H.R. 7267, 76th Cong, 1st sess, 
July 10, 1939. See SW to Representative May, 21 Jul 
39, SW files, Aircraft, item 1229, and AAF Hist 
Study 22, p. 70. Perhaps the most striking evidence 
of congressional suspicion is to be seen in Public 
168, 76th Congress, July 13, 1939 (53 Statutes 1000), 
which authorized procurement of secret devices 
"without advertising" but only after first securing 
three reputable bids. 



280 



BUYING AIRCRAFT 



tion as in the past but with a new twist. 
Now, instead of awarding an entire pro- 
duction contract to a single winner, the 
compromise bill proposed to authorize 
awards, at the Secretary's discretion, to 
the first, second, and third bidders in 
order of merit. 25 This was the so-called 
split-award provision. 

The split-award measure, which in- 
cluded the profit-limiting proviso of the 
earlier War Department bill, retained 
the advantages of competition and thus, 
in the eyes of Congress, protected the 
public purse. Yet, at the same time it 
did provide the Department with some 
latitude in permitting negotiations on 
price with the second and third place 
winners. On balance, the split-award 
bill would appear to have been a rather 
watered down compromise to which no 
one would take exception. However, 
even this limited authorization was re- 
sisted on the floor of the House, where 
the fear of negotiated contracts was re- 
peatedly expressed. One member, for 
example, asked, with characteristic if 
erroneous distress, if the proposed meas- 
ure would not permit awards to the 
"highest bidder." 28 Against such oppo- 
sition even the compromise split-award 
bill made slow progress. Introduced in 
July 1939, it was not finally made into 
law until March 1940, only two months 
before the disaster that was soon to befall 
the democratic cause in Europe. 27 

26 Merit was determined by the formula that had 
been worked out to equate performance, utility as to 
types, price, etc. See above, [p. ig8.| 

26 Cong Red, July 31, 1939, p. 10538. See also, 
Appendix, p, 4107, extension of remarks by Repre- 
sentative Harter, as well as testimony in Hearings 
of Senate Military Affairs Com on S. 2868 (H.R. 7267) 
76th Cong, 1st sess. 

27 Public 426, 76th Cong, March 5, 1940 (54 Stat 
45)- 



Procurement Law: An Appraisal 

This, then, was the situation at the be- 
ginning of the new year 1940. Even as 
Hitler posed his forces for the dramatic 
and terrifying assaults that marked the 
early spring, the Congress continued to 
see no emergency. As a consequence, 
Air Corps procurement for the coming 
year had to be by formal advertisement 
and bids— by the traditional safeguarded 
procedure of competition. 28 

If the law lagged dangerously behind 
the facts in the matter of authorizing 
emergency power to negotiate contracts, 
this was equally true with regard to other 
statutory provisions concerning procure- 
ment. Certainly it was so with most of 
the statutes originally enacted to promote 
social welfare rather than military effi- 
ciency. Many of the welfare statutes, in- 
dubitably meritorious in conception and 
intent, created serious problems for those 
concerned with national defense as a few 
illustrative instances will show. 

The Buy American Act of 1933, as its 
name implies, was intended to encourage 
domestic industry by requiring all pur- 
chases for the government to come from 
within the nation. 29 Just as the Buy 
American Act was to protect the nation's 
businessmen, the Walsh-Heal ey Act of 
1936 and the Eight-Hour Law of 1912 
Were designed to protect labor. 80 The 
Eight-Hour Law, drafted originally to 
abolish the notorious stretch-out, forbade 
all labor in excess of the eight-hour day 

28 TWX, Exec, OCAC, to Tech Exec, WF, 24 Jan 
40, WF Proc files, 400 Proc Method. 

28 Public 428, 72d Cong, March 3, 1933 (47 Stat 
1521). 

3U Walsh-Healey Act, Public 846, 74th Cong, June 
30, 1936 (49 Stat 2036); Eight-Hour Act, Public 199, 
6sd Cong, June ig, xgis (37 Stat 137). 



LEGISLATION FOR PROCUREMENT 



281 



on public works. Among its many provi- 
sions the Walsh-Healey Act required con- 
tractors on government work to meet the 
prevailing minimum wage and pay time 
and a half for labor in excess of the 40- 
hour week. Similarly, the various anti- 
kickback acts imposed heavy fines and 
prison sentences on contractors extorting 
rebates from employees engaged on pub- 
lic works. 31 

The statutes mentioned above, a list 
representative rather than exhaustive, 
were broadly conceived as social legisla- 
tion for general application in time of 
peace. Congress had recognized, specifi- 
cally in some cases, that amendment or 
outright suspension would be necessary 
in time of war. But what about the twi- 
light zone that was neither peace nor 
war? What about the period of rearma- 
ment from the White House decision in 
November 1938, to the attack on Pearl 
Harbor? In present-day jargon, this was 
an era of cold war, but most unfortunately 
the statutes made no mention of such a 
circumstance. 

As the aircraft expansion program 
gathered headway in the summer of 
1939 and, one after another, contracts 
were let, the War Department began to 
receive a wave of complaints. Many 
manufacturers were dismayed at the in- 
clusion of the Eight-Hour Law stipula- 
tions in their contracts. They were more 
than willing to pay time and a half for 
overtime, they assured the Department, 
and had made their bids accordingly. 
Only belatedly had they discovered that 
the Comptroller General insisted upon 

31 See especially, Public 798, 71st Cong, March 3, 
1931 (46 Stat 1494); Public 324, 73d Cong, June 13, 
•934 (48 Stat 948); and Public 403, 74th Cong, August 
30. '935 (49 Stat ion). 



the eight-hour clause in their contracts 
as an absolute prohibition on work in 
excess of eight hours in any single day. 
Even with overtime work allowed, the 
shortage of skilled labor constituted a 
serious deterrent to the rearmament pro- 
gram. Responsible procurement officers 
believed that the Comptroller's intransi- 
gent insistence upon the exact letter of 
the law might bring outright disaster by 
leaving the nation unarmed in its hour 
of peril. 32 

There followed a frantic appeal to the 
Attorney General whose lawyers went 
burrowing after precedents to authorize 
an escape. The search was no doubt has- 
tened on when one of the nation's leading 
engine manufacturers, in fact the sole 
source for liquid-cooled, in-line engines, 
flatly refused to bid on an Air Corps con- 
tract containing the Eight-Hour Act pro- 
visions. This refusal was neither auto- 
cratic nor unpatriotic; the manufacturer 
was quite willing to pay for overtime work 
but to comply with the eight-hour curb 
on labor would have disrupted his entire 
plant, which was already at work on an 
overtime basisi 33 For months the various 
legal advisors of the Government passed 
this question to and fro. At last, during 
the catastrophic days of May 1940, Con- 
gress acted to suspend the Eight-Hour 
Law during the emergency. 34 Mean- 
while, nine precious months had been 
lost. 

32 Memo, CofAC for ASW, 15 May 40, AFCF 161 
Contract Requirements. See also, Compt Gen to 
SW, 19 Oct 3g, WF Proc files, 016 Compt Gen De- 
cisions; and 17 Compt Gen 937. 

33 TWX, Contract Sec, WF, to Contract Sec, OCAC, 
14 May 40, for Allison case; J. K, Northrup to Con- 
tracting Officer, Mat Div, 85 Jun 40. Both in WF 
Proc files, 016, Compt Gen Decisions, 

34 Copy, SW to Compt Gen, 13 Feb 40, and related 
correspondence, SW files, Aircraft, item 1411. 



282 



BUYING AIRCRAFT 



Another difficulty arose from a strict 
compliance with the Walsh-Healey Act 
and its related statutes. For effective en- 
forcement, these laws required the sub- 
mission of public contracts to the Secre- 
tary of Labor for approval. In addition, 
manufacturers were required to inform 
the Secretary of the Treasury each week 
the exact wages paid to each employee 
engaged on a public contract, including 
not only the labor force of the prime con- 
tractor but the employees of all subcon- 
tractors as well. Even in peacetime, com- 
pliance with these provisions imposed a 
heavy burden of administrative overhead. 
As the nation rearmed during 1939 and 
1940, the difficulties of administration 
became well-nigh insupportable. The 
number of subcontractors on many con- 
tracts multiplied from tens to hundreds. 
By the spring of 1940, the average air- 
frame manufacturers had between 300 
and 400 subcontractors and one airframe 
builder had more than 700 of them. 35 
Employment rose, sometimes almost over- 
night, from hundreds to tens of thou- 
sands. Obviously, under such circum- 
stances, full compliance with legislation 
drafted when labor desperately needed 
such safeguards threatened to become ut- 
terly unworkable in a period when labor 
had a seller's market. 36 The national 
defense effort, including work on the 
B— 17, Boeing's famous Flying Fortress, 
appeared to be menaced by a bookkeep- 
er's nightmare— all because no legislative 
provision had been made to take into ac- 

35 Col M. C. Cramer, JAGD, to Actg Asst Solicitor 
Gen, 23 May 40, JAG (Army) Reds Gen Sec, 160 
Contracts (4 Dec 39). 

36 A good illustration of the staggering administra- 
tive burden involved in compliance with the statutes 
in question may be found in: Murray, of Boeing, to 
Chief, Mat Div, 30 Oct 39, and Memo, JAG for ASW, 
13 Dec 3g, WF JAGO Kickback file. 



count the situation presented by a period 
o£ rearmament that was neither peace 
nor war. 

Probably no statute better shows up 
the difficulties than does the Buy Ameri- 
can Act. As the flood of defense orders 
began to absorb a larger and larger por- 
tion of the nation's resources and acute 
scarcities appeared in many raw mate- 
rials, manufacturers and suppliers began 
to protest against the restrictions of the 
law that required military purchases to 
be made within the United States. Their 
complaints reached something of a climax 
over the problem of supplying aviation 
fuel for Air Corps units stationed in the 
Panama Canal Zone. Tank storage there 
was inadequate, and tankers were not 
always available. As an expedient, the 
supplier, Standard Oil of New Jersey, 
wished to transport aviation gasoline 
from the United States to Aruba, the 
Dutch isle off the coast of Venezuela 
where the corporation had ample storage 
facilities. From Aruba, Standard Oil 
could readily supply the needs of the 
Panama defense forces without delay. 
However, since the tanks at Aruba also 
stored oil from Venezuelan sources, the 
corporation could not honestly certify 
that the product withdrawn from the 
common tankage was the very same as 
that shipped originally from the United 
States. After a delay of weeks, War De- 
partment attorneys found a way out of 
this dilemma in a five-page legal opinion 
holding fuel to be a fungible commodity 
comparable to grain in a common ele- 
vator and therefore not identifiable. 37 



37 Memo, Asst to Dir, Purchases and Contracts, 
OASW, for JAG, 13 Aug 40, and 1st Ind, JAG to 
ASW, undated. Both in WF JAGO, Buy American 
file. 



LEGISLATION FOR PROCUREMENT 



283 



Thus it turned out that some six weeks 
after the President had declared aviation 
fuel "essential to defense" by formal proc- 
lamation, the Buy American Act still in- 
truded delays in the national mobiliza- 
tion program. 38 It continued to do so 
until well after Pearl Harbor, for as late 
as June 1942 contracting officers were still 
worried over the legality of contracts that 
omitted, at the direction of the Secretary 
of War, the Buy American stipulation. 39 

To pursue the roster of statutes that 
posed difficulties to the nation's rearma- 
ment program is unnecessary. The ex- 
amples cited illustrate that the statute 
books contained laws for peace and laws 
for war, but the laws were inadequate 
for an era of cold war or half-war such 
as that existing from the time the Air 
Corps expansion program began in 1938, 
or at least from the outbreak of war in 
Europe during 1939, to Pearl Harbor. 

Improvising Legislation in a Crisis 

The Turning Point 

President Roosevelt's message of 16 
May 1940 in which he asked for 50,000 
aircraft marked the real turning point for 
procurement legislation in the United 
States. Where before the Congress was 
suspicious, it was now openhanded. The 
President took an entirely unqualified 
stand in behalf of more arms— such a 
stand as he had not taken during the 
previous summer when Assistant Secre- 
tary Louis Johnson urged him to support 



38 Proclamation 2413, July 2, 1940, in Federal Reg- 
ister, V, No. 30, July 4, 1940, 2467. 

S9 XWX, Contract Sec (Washington) to Contract 
Sec (WF), 22 Jim 42, WF JAGO, Buy American file. 



even so modest a request for discretionary 
powers as that contained in the split- 
award bill. But now the rush of events 
had caught up with him. After the 
Wehrmacht triumphs in Europe, his dra- 
matic plea for 50,000 aircraft was no 
longer far out in advance of public opin- 
ion, nor, for that matter, was it far ahead 
of congressional thinking; the mood of 
Congress had changed. Where only a 
few short months before congressmen 
had refused to see the emergency de- 
scribed by military officials, they now 
asked, "What can we do to strengthen 
the nation's defense?" 40 "Tell us your 
needs," senators urged the Army and the 
Navy, as they hastened to give priority to 
defense legislation already on the Hill 
and to consider whatever additional leg- 
islation the emergency required. 

Emergency Legislation 

The first fruits of the new enthusiasm 
in Congress for military measures took 
the form of money bills— vastly enlarged 
appropriations to finance defense spend- 
ing. 41 Even more significant, however, 
were the bills drafted to speed up the 
procurement process. In the week fol- 
lowing the President's plea for 50,000 



40 For congressional reluctance to recognize the 
emergency as such, see House Hearings on supple- 
mentary WD appropriation for FY 1940, May 19, 
1939, p. 62. See also Aviation (September 1939), p. 
53. For the changing mood of Congress, see, for 
example, Cong Red, May 14, 1940, p. 60844, a "d 
House vote on H.R. 9850, 76th Cong, 3d sess, May 
24, 1940. 

41 Appropriation for FY 1941, June 13, 1940, Pub- 
lic 611; 1st Supplement, June 26, 1940, Public 667; 
2d Supplement, September 9, 1940, Public 781; 3d 
Supplement, October 4, 1940, Public 800. All 76th 
Cong, gd sess. 



284 



BUYING AIRCRAFT 



aircraft at least half a dozen measures of 
signal importance to national defense 
were referred to committees for consid- 
eration. In the Senate and House both 
the military and the naval committees 
set to work on these proposals and in a 
matter of days reported out bills that 
would effect fundamental and even revo- 
lutionary changes in military buying. 

The first bill of importance to military 
procurement to be enacted after the 
President's address was not, strictly speak- 
ing, an Air Corps bill, although it was to 
have a far-reaching effect upon air arm 
operations. The act authorized the Re- 
construction Finance Corporation (RFC) 
to lend money or to buy stock in corpo- 
rations organized to promote national 
defense. The Defense Plant Corporation 
(DPC) set up under this act was empow- 
ered to extend loans to manufacturers 
needing working capital and to finance 
facility expansions. The underlying phi- 
losophy of the act is evident: the RFC 
could absorb any postwar losses better 
than could private bankers who were un- 
derstandably reluctant to underwrite the 
high risk of immense wartime expan- 
sions, which might become utterly un- 
economical at the close of hostilities. 
The application of this act can best be 
discussed in the following chapter; for 
the moment it is sufficient to see it as but 
a single item on the roster of emergency 
laws. 42 

The second emergency measure to be 
enacted was one sponsored by Congress- 
man Vinson of Georgia, chairman of the 
House Naval Affairs Committee. This 



42 Public 664, 76th Cong, 3d sess, June 25, 1940 
(54 Stat 573). Se e also, AAF Hist Study 40, pp. 30- 
32, and fh. XIV| below. 



was essentially a Navy measure; as passed, 
however, some of its terms applied to the 
War Department. The Vinson Act (the 
National Defense Expediting Act) was an 
involved piece of legislation with many 
sections and subsections, but the powers 
it conferred and the curbs it imposed may 
be summarized briefly. 43 

The act authorized the Secretary of the 
Navy to negotiate contracts in his discre- 
tion. The inhibitions, the fear of fraud 
that had marked past congressional think- 
ing, were now swept away in a broad 
grant of powers safeguarded only by the 
Navy's promise not to use the privilege 
save when necessary. 44 The act did not 
stop with negotiation; the Secretary of 
the Navy was even empowered to modify 
existing contracts where the exigencies of 
defense warranted such action. The act 
also provided for the payment of advances 
of as much as 30 percent on the contract 
price to help contractors get defense pro- 
duction started. Once begun, partial or 
progress payments were authorized be- 
fore completion of the contract, to help 
manufacturers meet their operating costs 
when undertaking projects far beyond 
the normal range of their working capital. 

The Vinson Act also authorized the 
use of cost-plus-fixed-fee (CPFF) con- 
tracts, provided the fee did not exceed 
7 percent of the estimated cost. The 
cost-plus-a-percentage-of-cost (CPPC) con- 
tract made odious during World War I 
was expressly prohibited. In banning 
the CPPC contract, Congress hoped to 
deny manufacturers any incentive to pyr- 
amid their costs and thus their profits. 

43 Public 671, 76th Cong, 3d sess, June 28, 1940 (54 
Stat 676). 

44 House Rpt 1863, 76th Cong, 3d sess, June 20, 



LEGISLATION FOR PROCUREMENT 



285 



The CPFF contract, on the other hand, 
gave manufacturers no reason to increase 
their costs, although it must be admitted 
that it gave little incentive for reducing 
them either. But the advantage of the 
CPFF contract to the government was 
obvious: using it, manufacturers with 
little or no experience in operations on 
the scale proposed in the defense pro- 
gram could be induced to sign contracts 
they would never touch if compelled to 
sign the conventional risk-type or fixed- 
price contract form. 

The discretionary powers mentioned 
above were available only to the Navy, 
but some provisions of the Vinson meas- 
ure were intended to govern both Army 
and Navy procurement. One such was 
the profit limit on all Army and Navy 
aircraft contracts. Where previous profit 
curbs had been set at 10 and 12 percent, 
the new ceiling stipulated was 8 percent. 
If actual cost was less than the contract 
price, the contractor was then allowed to 
retain 8.7 percent of this cost as his profit. 
The act also subjected subcontractors to 
this profit limit whenever the sum in- 
volved reached $25,000. 

A final feature of the Vinson Act ap- 
plying to the Army as well as the Navy 
was the section authorizing the Secre- 
taries to certify to the Commissioner of 
Internal Revenue as to the necessity for 
and cost of any additional facilities re- 
quired by manufacturers to fulfill a de- 
fense contract. Certification amounted 
to a decided tax advantage to manufac- 
turers with munitions contracts since 
they could write off their capital costs by 
the amount certified rather than the 5 or 
10 percent normally allowed under the 
prevailing peacetime statutes. All in all, 
the Vinson measure gave the Navy, and 



to a lesser extent the Army, broad discre- 
tionary powers with which to hasten de- 
fense production. 45 

The third major procurement bill en- 
acted after the President's appeal was one 
sponsored by Representative May, chair- 
man of the House Military Affairs Com- 
mittee, In its final form this measure 
was far more sweeping than the Vinson 
legislation. 46 It authorized the Army to 
make use of negotiated contracts, CPFF 
contracts, advance payments, and actu- 
ally authorized the government to under- 
take the erection of facilities even when 
this had to be done on private sites. 
These provisions conferred powers nearly 
parallel to those given the Navy. In ad- 
dition, Representative May's measure in- 
cluded statutory language granting the 
broadest sort of powers to the President 
so that he might "provide for emergen- 
cies," exercise wide discretion, and buy 
"with or without competition." 

The three acts described above were 
"emergency legislation" in every sense of 
the phrase and as such they were note- 
worthy. The acts gave the Army and 
Navy what they needed most desperately 
—sweeping grants of discretionary power 
to escape the time-consuming restraints 
of peacetime competitive buying and to 
place orders with smaller and weaker 
concerns that could never have won or- 
ders competitively, thus broadening the 
base of defense production. 

On the other hand, the character and 
content of the three acts suggest some- 



45 This discretion included the power to suspend 
certain civil service and social welfare statutes where 
necessary. For an extended discussion, see Smith, 
The Army and Economic Mobilization, ch. IX. 

46 Public 703, 76th Cong, 3d sess, July s, 1940 (54 
Stat 712). 



286 



BUYING AIRCRAFT 



thing of the inherent difficulty encoun- 
tered when enacting emergency legisla- 
tion. Although the problem of industrial 
mobilization confronting the services was 
a common one, Congress, operating with- 
in the traditional framework of separate 
committees for the Army and Navy in 
each house, came up with separate bills 
for each service. As a consequence, even 
though there was some overlapping with 
laws common to both, the Secretary of 
the Navy enjoyed some powers not given 
the Secretary of War and vice versa. The 
two services, then, rushed to rearm under 
numerous statutes that gave them inequi- 
table and unbalanced powers for dealing 
with the common tasks of mobilization. 47 
Even more significant than the differ- 
ing statutory bases of Army and Navy 
operations was the character of the laws 
themselves as indicative of the difficulties 
to be met in emergency legislation. True, 
the emergency statutes granted broad 
powers to the responsible civilian Secre- 
taries and even broader powers to the 
President, but the powers were only a 
beginning. Discretionary powers— such 
as the authority to negotiate contracts- 
were certainly of the utmost utility to the 
services in speeding procurement. Nev- 
ertheless, generous grants of power, when 
hastily conferred at the penultimate cri- 
sis, are no substitute for legislation built 
out of years of experience, legislation 
carefully tailored to suit the needs of the 
services as revealed in practice. 48 In 

47 By way of illustration, the Secretary of the Navy 
received authority to seize facilities when necessary 
by the Act of June 28, 1940, although the Secretary 
of War did not receive comparable authority until 
ten weeks later. 

18 See Chapters | IV | and [v] for discussion of the 
importance of operating experience in making new 
legislation meaningful. 



fact, the very passage of the statutes au- 
thorizing procurement without competi- 
tion brewed trouble. The newly author- 
ized power to negotiate contracts opened 
a whole new field of activity that was soon 
crying for clarifying legislation— a field 
hitherto unknown and unexplored, since 
many of the problems encountered when 
negotiated contracts were introduced sim- 
ply did not exist so long as procurement 
had been restricted to sealed bid compe- 
tition. 

Still another difficulty inherent in 
emergency legislation was the matter of 
timeliness. The wide discretionary pow- 
ers that Congress granted to the military 
services were adequate only so long as 
the government enjoyed a buyer's mar- 
ket. Such a situation had existed when 
the War Department first sought permis- 
sion from Congress to negotiate contracts. 
When at last Congress did grant this au- 
thority, the whole outlook of the indus- 
try had changed. Where before most 
Air Corps contracts had tended to cluster 
in the hands of a few successful manu- 
facturers, leaving the rest of the industry 
idle and begging for work, now, espe- 
cially after Dunkerque and the fall of 
France, a flood of orders from abroad had 
induced a seller's market— the aircraft 
manufacturers, vendors, and suppliers 
had more work than they could handle. 
The military services were authorized to 
negotiate contracts, but by this time the 
manufacturers were not particularly in- 
terested in negotiating since the indus- 
try's order backlog was already mounting 
by millions of dollars. What is more, 
export orders were not subject to the 
profit curbs improsed by Congress. Why, 
asked the manufacturers, should we 
dicker with the government and submit 



LEGISLATION FOR PROCUREMENT 



287 



to all the inconveniences and disadvan- 
tages of military purchasing when we can 
sell abroad virtually without strings? 
Desperate states in Europe with their 
backs to the wall, ordering in panic, could 
scarcely afford to bargain as closely with 
the aircraft manufacturers as procure- 
ment officers for the military services at 
home were certain to do. Some manu- 
facturers, already swamped with domes- 
tic as well as foreign orders, even urged 
procurement officers to give the available 
orders to their competitors. 49 

In a word, the emergency statutes of 
June and July 1940 were not only obso- 
lete, already lapped by the course of 
events when passed, but also created new 
problems that in turn required legisla- 
tive solution. Even though conscien- 
tiously drafted to permit the widest pos- 
sible latitude to the departments, the 
emergency statutes were of necessity only 
the beginning of a long series of acts, each 
a piecemeal or patchwork attempt to has- 
ten and foster the nation's defensive mo- 
bilization. 

Patchwork Laws 

Congressional zeal for the cause of de- 
fense did not burn itself out with the 
passage of the laws already mentioned. 
Symptomatic of the co-operative spirit on 
the Hill was the resolution, introduced 
by Senator Tom Connally of Texas, pro- 
posing that all defense contracts be re- 
quired to go on full shift, twenty-four- 
hour operation. This was enthusiastic 
co-operation indeed; it was, in fact, a bit 
too enthusiastic. As War Department 
spokesmen pointed out, some items in 



« See AAF Hist Study 40, ch. Ill, n. 23. 



the armament program were less urgent- 
ly required than many others, and to in- 
sist, by compulsory legislation, that all 
contracts be pursued at full force around 
the clock might well lead to needless 
overloading of production capacity to 
the detriment of the defense effort. 50 

Enthusiastic support from the Hill was 
most welcome to the War Department, 
but less compulsion and more elabora- 
tion of discretionary powers would seem 
far more appropriate. During the sum- 
mer of 1940, experience gathered when 
operating under the emergency statutes 
passed just after the President's call for 
50,000 aircraft clearly demonstrated the 
need for further legislation to meet the 
deficiencies in the measures. New stat- 
utes would be needed not only to handle 
the difficulties growing out of the novel 
practice of negotiating contracts but also 
to cope with the exigencies of a seller's 
market. Congress would have to concoct 
measures— inducements or coercions— to 
secure the productive capacity of the na- 
tion's manufacturers for the defense ef- 
fort. 

By early fall Congress was ready with 
a set of legislative patches to cover the 
flaws the summer's operations had re- 
vealed. Within the span of a relatively 
few days a large number of laws went on 
the statute books. These, too, were emer- 
gency laws, yet in a very real sense the 
underlying philosophy on which they 
rested had subtly shifted from what it 
had been earlier in the season. In the 
spring the assumption had been that once 
freed of the requirements of competition, 



5 " S Res 389, 76th Cong, 3d sess, July 1, 1940, text 
in Cong Red, July 1, 1940, p. 909S. See also, AF 
Hist Study 22, pp, 75-76, 



288 



BUYING AIRCRAFT 



contracts could be freely entered with the 
nation's munitions manufacturers. This 
second round of emergency laws rested 
upon a skillful mixture of carrot and 
stick. Manufacturers were confronted 
with a series of blandishments and com- 
pulsions to participate in the great na- 
tional defense effort. 

The first legislative patch was distinctly 
carrot. In addition to lavish appropria- 
tions to expedite production, the act con- 
tained inducements to new and inex- 
perienced firms of uncertain financial 
standing. Procurement officers were au- 
thorized to waive bid bonds, hitherto 
required of all contractors to guarantee 
satisfactory performance or money back 
on the items procured. If some congress- 
men had had their way, the carrot would 
have tasted far better; they proposed to 
raise the profit curb on aircraft manufac- 
tured for the United States from 8 to 12 
percent of contract price. To the chagrin 
of the manufacturers, however, this pro- 
vision was stricken before enactment. On 
the other hand Congress, ever anxious to 
take the profits out of war, reduced the 
allowable fee in CPFF contracts to 6 per- 
cent of cost. 51 

The second bit of legislative patch- 
work insofar as military procurement was 
concerned took the shape of a club slipped 
into the epochal Selective Service Act of 
16 September 1940. It was, no doubt, 
shrewd politics to balance the encroach- 
ments of the draft upon personal freedom 
with a commensurate restraint on corpo- 
rate freedom. At any rate, Congress 
seized this convenient moment to impose 



51 Public 781, 76th Cong, 3d sess, September 9, 
1940 (54 Stat 872). See also, House Rpt 2810, July 31, 
1940. 



on all government orders an obligatory 
priority that would ensure delivery on 
defense contracts ahead of export sales. 
In conjunction with this, Congress gave 
the Secretary of War power to seize pro- 
duction facilities from recalcitrant or un- 
co-operative manufacturers who delayed 
the defense effort. Procurement officials 
had little desire to wield this club, but its 
mere presence in the department's legis- 
lative arsenal was expected to animate 
manufacturers with a willingness to ne- 
gotiate rather than lose their facilities 
and suffer the heavy fine or imprisonment 
imposed as penalties. 52 

A month later Congress was still blend- 
ing incentives and mandates to shore up 
the system of negotiated procurement 
with whatever additions and corrections 
events had shown to be necessary. Of 
particular interest was a statute designed 
to help smaller business firms by author- 
izing the assignment of claims. Under 
the terms of this act, manufacturers 
working on defense orders could assign 
to banks their claims for payments by the 
government in return for advances in 
working capital, a practice hitherto pre- 
cluded by a century-old law. 53 

Without doubt, the most important 
bait offered by Congress to cajole manu- 
facturers into the defense effort appeared 
in the Second Revenue Act, 8 October 
1940. In this statute, Congress suspended 



52 Public 78g, 76th Cong, 3d sess, September 6, 
'94° (54 Stat 885). See also, Cong Red, 20 June 
1940, p. 8680, and following for evolution of S. 4164, 
and J. H. Ohly, History o£ Plant Seizures During 
World War II, 1947, draft MS, OCMH. 

58 Public 811, 76th Cong, 3d sess, October 9, 1940 
(54 Stat 1029). See also, CPA, Policies Governing 
Private Financing of Emergency Facilities, Hist Rpts 
on War Administration, WPB, Special Study 12, p. 
24. 



LEGISLATION FOR PROCUREMENT 



289 



the profit limit on aircraft entirely.* 4 
Capitalism rather than compulsion, the 
congressmen hoped, would induce greater 
production. And the profits allowed, 
having served their purpose, would be 
taken up in the excess profits taxes laid 
on elsewhere in the same statute. Re- 
moval of the profit limitation on aircraft 
manufacturers was not merely a conces- 
sion granted under pressure but rather 
an effort to return the aircraft manufac- 
turers and shipbuilders to the status of 
all other manufacturers. So long as air- 
craft and shipbuilding firms, and they 
alone, labored under profit limitations, 
they found it difficult if not impossible 
to get subcontractors (who were sub- 
jected to the same profit limitation im- 
posed on the prime contractors) to enter 
negotiations. 55 And why should subcon- 
tractors accept aircraft orders if there 
were jobs to be had in other segments 
of industry producing munitions for de- 
fense that did not impose profit curbs? 
Another feature of the Revenue Act, de- 
cidedly more persuasive than peremptory, 
was the section authorizing rapid, five- 
year depreciation of new facilities certi- 
fied as necessary for defense by the Secre- 
taries of War and Navy. 5 * Under this 
provision, manufacturers expanding their 
productive facilities for defense could, on 
certification, write off 20 percent of their 
capital outlay each year as depreciation, 
an unusually advantageous deduction in 
a period of abnormally high taxes. 

In 1941 Congress enacted virtually no 
legislation of significance to military pro- 

54 Public 801, 76th Cong, gd sess (54 Stat 974, Title 
IV). 

? 5 H. Rpt 2810, 76th Cong, 3d sess, July g 1, 1940, p. 8. 

56 54 Stat 974, Title III. For an extended discus- 
sion of the amortization plan in operation, see Smith, 
The Army and Economic Mobilization, ch. XX. 



curement. The broad powers already 
conferred left the War Department with 
a relatively free hand to work out its own 
problems. Thus, from October 1940 to 
December 1941, apart from a few rela- 
tively minor items such as an extension 
of the statutory authority already granted, 
Congress did not alter the procurement 
laws. 57 Some few bills were proposed 
calling for important changes, but none 
passed. 58 

If procurement officers lacked adequate 
latitude in negotiating contracts before 
Pearl Harbor, Congress tried to rectify 
any such omission in the First War Pow- 
ers Act of 18 December 1941, which au- 
thorized the President and his agents to 
enter contracts without regard to the pro- 
visions of existing law when to do so 
would hasten the war effort. At last all 
restrictions on the negotiation of con- 
tracts were swept away. Insofar as pro- 
curement legislation was concerned, this 
was a capstone. 69 Congress did, of course, 
continue to add patches and pieces of 
legislation throughout the war. But with 
the possible exception of the renegotia- 
tion statute which can be considered more 
conveniently in a subsequent chapter, 60 
for all practical purposes, with the pas- 
sage of the First War Powers Act, pro- 
curement officers had just about all the 
major discretionary powers they needed. 91 

57 Public 89, 77th Cong, ist sess, May gi, 1941, 
(55 Stat 236). 

68 See H.R. 1615, 1775, and 4945, 77th Cong, 1st 

sess. 

88 Public 354, 77th Cong, 1st sess, December 18, 
*94i (55 Stat 838). The Second War Powers Act, 
March 27, 1942 (56 Stat 176), contained no powers 
of inter est to War Department procurement officers. 

^See fchi XVII. I 

61 For evidence on the adequacy of existing laws 
for procurement, see IOM, JAG (WF) for Chief, Con- 
tract Sec, 30 Sep 41, AFCF 400.12. 



CHAPTER XIV 

The Problem of Industrial Capacity 



The Beginning of Facility 
Expansions 

The Foundations of Policy 

The President's call for 50,000 air- 
planes precipitated a veritable avalanche 
of correspondence upon the desks of Air 
Corps staff officers. Not least among 
their troubles was the question of capac- 
ity. Would the productive facilities of 
the nation's aircraft manufacturers be 
sufficient to meet this new and vastly en- 
larged requirement? 

The Air Corps had paid a good deal of 
attention to the problem of productive 
capacity during the prewar years. 1 Offi- 
cers concerned with mobilization plan- 
ning throughout the twenties and early 
thirties had drawn up rather elaborate 
factory plans calling for the manufacture 
of aircraft in the automotive facilities of 
Detroit during an emergency. All these 
plans rested upon the assumption that 
aircraft builders would freely consent to 
hand over their latest designs for mass 
production. With the coming of a real 
emergency, however, this general prin- 
ciple, which had seemed sound enough 
on paper, now lost much of its appeal. 

When War Department officials tried 
to bring individual airframe and auto- 



mobile manufacturers together, most of 
the aircraft builders shied off. They ar- 
gued that the automobile manufacturers 
lacked aeronautical engineers and facili- 
ties with adequate clearances for the 
wing span of current aircraft. More sig- 
nificant, perhaps, was the reluctance of 
the old-line aircraft builders to train post- 
war competition among car builders with 
their well-known reservoirs of tooling 
skills and working capital. Under the 
circumstances, Air Corps officers found 
it necessary in the fall of 1938 to recast en- 
tirely their mobilization plans. There- 
after, it was agreed, all final airframe as- 
sembly work would be performed by old- 
line, established aircraft firms as prime 
contractors. The automotive manufac- 
turers would serve only as subcontractors 
providing the primes with parts and sub- 
assemblies. 2 

As a consequence of this reversal, which 
redefined the anticipated role of the auto- 
motive firms, the detailed factory plans 
compiled over the past two decades had 
to be scrapped. Since they were admit- 



VII 


VIII 


and 


IX 



a ASW to CofAC, 23 Sep 38, and 1st Ind, CofAC 
to ASW, 12 Oct 38, WFCF 381 Mobilization (1939); 
AAF Hist Study 40, pp. 17, 21. The decision not 
to use automobile manufacturers as prime contrac- 
tors on aircraft appears also to have rested on lessons 
derived from the British shadow factory plan. The 
whole subject of the influence of British experience 
on U.S. policy is one that could profitably be studied 
at length. See especially, London Military Attache 
Rpt 39854. 4 Jan 39. WF CADO F 35 / 3 7 5 . 



THE PROBLEM OF INDUSTRIAL CAPACITY 



291 



tedly faulty, their demise probably occa- 
sioned little real loss. 3 Nevertheless, it 
was this turn of events that led the Air 
Corps to enter the period of acute na- 
tional crisis with a policy but no plans. 

The Detroit car builders were not the 
only competitors feared by the aircraft 
manufacturers. The President's air ar- 
senal scheme was even more disturbing 
in its implications. To manufacturers 
who could remember with distaste the 
acres of empty floor space that burdened 
them during the depression years, the 
prospect of competition from federal air- 
craft plants could scarcely be regarded as 
other than ominous. Not surprisingly, 
the industry as a whole broke into a 
chorus of assurances that the Air Corps 
rearmament program could readily be 
accomplished without further plant ad- 
ditions. 4 In such an environment of fear 
and misgivings, serious consideration of 
possible wartime plant expansions was 
difficult, to say the least, since any sugges- 
tion of government-financed facilities, 
however necessary they might be for war 
purposes, was bound to bear the taint of 
nationalization for manufacturers acute- 
ly sensitive on this point. 

Further complicating the task of de- 
termining whether or not the nation's 
aircraft manufacturers could handle the 
load was the shifting character of that 
load itself. What had begun as the Pres- 



8 See above[ch7vTTJ 

4 ASW to C. W. Larner {Baldwin Locomotive 
Works), 11 May 39,, SW files, Airplanes, item 116Y; 

Review of Methods Employed by the AAF ATSC 

Logistics Planning Div, p. 16. The planners at 
Wright Field accepted the assumption that the Presi- 
dent's air arm build-up could and should be done 
without further plant expansion. See Chief, Mat 
Div, to CofAC, 2z Dec 38, AFCF 452. 1A Proc of Air- 
craft. See also above.lpp. 17^— 7g.| 



ident's goal of 10,000 in November 1938, 
was watered down to some 5,500 in Con- 
gress the following winter, only to leap 
up to 50,000 in May 1940. Each such 
gyration in quantity, not to mention the 
matter of quality, models, types, and so 
on, brought drastic variations in the esti- 
mates of capacity required. 

All these difficulties were in themselves 
decidedly upsetting to the mobilization 
planners, but, as the reader will recall, 
throughout most of the 1939 build-up 
period air arm staff officers were actually 
unable to measure productive capacity 
with any reasonable degree of accuracy. 
The program of modified educational or- 
ders or production data contracts helped 
to clarify the problem but did so only 
belatedly. More useful were the findings 
of the Yardstick Board, which gave Air 
Corps staff officers a most necessary tool 
for planning. But even this measuring 
stick became available only after war 
broke out in Europe, and by then the 
whole problem of aircraft production ca- 
pacity in the United States had entered 
a most crucial phase. 6 

By the time the industry had been re- 
surveyed with the Yardstick Board's cri- 
teria, several more precious weeks had 
passed. Therefore, not until the late fall 
of 1939 did it become generally apparent 
that vast new facilities would be required 
in the aircraft industry. In tenor with 
the prevailing attitude, these were envi- 
sioned as additions to existing facilities 
owned by the aircraft manufacturers 
rather than as air arsenals or government- 
owned installations. 6 



5 See above, pp. litjg— 93^ 

8 Memo, Dir, Planning Br, OASW, for CofAC, 
3 Oct 39, and 1st Ind, reply, 10 Oct 39, AFCF 004.4. 



292 



BUYING AIRCRAFT 



Thus it turned out that in the months 
immediately before the President's call 
for 50,000 airplanes, the Air Corps staff 
officers responsible for mobilization plan- 
ning were only just emerging from the 
exploratory stage in which they had en- 
deavored to find out how much aircraft 
production capacity the nation really did 
possess. Of necessity, their program for 
expanding facilities was little more than 
a sketch, tentative and unfinished. The 
planners themselves confronted their 
tasks with a good deal of uncertainty; not 
only were they inexperienced in the prob- 
lems of facility expansion, they had to 
set about their tasks before the necessary 
enabling legislation had been passed. 7 

The problems of industrial mobiliza- 
tion—including accurate measurement of 
capacity and the planning of facility ex- 
pansions—are far too complex and too 
laden with variables to lend themselves 
to simple solutions or easy generalizations 
on policy before the event. Because of 
this, useful and detailed mobilization 
planning in advance for facility expan- 
sions was difficult if not impossible to 
achieve. Responsible officers may have 
been sorely at fault for their prewar fail- 
ure to explore alternatives of policy with 
vigor and imagination, but insofar as de- 
tailed planning is concerned, it is doubt- 
ful whether the most prescient of staffs 
could have drafted plans to encompass 
the many parameters of the national 
scene during the early months of 1940. 
Whether the military staffs were remiss 
or not in failing to provide suitable plans 
in advance for the crisis of May 1940 is 
now beside the point. The fact remains 
no plans were available. Even the very 

» See above, chs j VIIl) and |XIII. | 



nature of the task at hand was unclear. 

In his call for 50,000 airplanes the 
President had boldly set a production 
target; now the problems involved in 
reaching this goal required definition. 

Commissioner Knudsen of the NDAC 
suited the needs of the occasion. He was 
an industrial titan with great prestige. 
Moreover, he was trained by his indus- 
trial experience to look at the "big pic- 
ture" and reduce it to simplest terms. 
Having looked, in those agonizing days 
of May 1940 when all Europe seemed to 
collapse, Mr. Knudsen drew the whole 
problem into focus with two blunt ques- 
tions: "How much capacity do you need?" 
and "When do you need it?" 8 

How Much and When? 

Knudsen's questions defined the job in 
hand and set in motion a train of action 
in the War Department. 9 Hitherto no 
one had so narrowly defined the charac- 
ter of the problem. The President him- 
self had been vague concerning the im- 
plementation of his production goal. 
Soon after his address before Congress, 
he received a group of reporters as he 
worked in shirtsleeves at his desk. En- 
gine production was the real bottleneck, 
he told them; there was already an am- 
ple margin of idle airframe capacity. If 
plant expansions should be needed, pri- 
vate capital rather than public money 
would do the job. 10 The Secretary of 
War echoed these assurances— the War 

8 Watson, Chief of Staff: Prewar Plans and Prepa- 
rations, p. 174 and n. 106. The words are attributed 
to Knudsen by Colonel Burns, Executive Assistant 
to Mr. Johnson. Memo, Burns for ASW, 13 Jun 40. 

9 Ibid. See also Wright, "50,000 Planes a Year: 
How Much? How Long?" in Aviation (July 1940). 

10 New York Times, May 22, 1940, 10:5. 



THE PROBLEM OF INDUSTRIAL CAPACITY 



293 



Department had no intention of erecting 
aircraft plants with federal funds. 11 

But the President and the Secretary 
were expressing opinions and intentions, 
not facts. Mr. Knudsen's provoking chal- 
lenge showed up their words for what 
they were and touched off a furious round 
of conferences and staff studies to get the 
facts that would answer the questions 
Knudsen posed. 12 

On the first of July 1940, a month and 
a half after the President's address before 
Congress, the combined efforts of the 
military and civilian agencies produced 
the necessary answers. On that date the 
Airplane Division of the NDAC sub- 
mitted its crucial report on the nation's 
aircraft productive capacity. 13 To ap- 
proximate the President's program, a 200- 
percent increase in floor space would be 
required. And along with this there 
would have to be a 400-percent increase 
in the labor force, widespread agreement 
on standardization, and willingness to 
spread the work load across the available 
capacity, particularly by greater use of 
subcontracting. To these prescriptions 
the authors of the NDAC report added 
an explicit caveat: any attempt to reduce 
the expansions indicated in the report by 
postponing the completion date of the 
program should be avoided as dangerous 
to national security. Moreover, they 

11 SW to joplin, Mo., Chamber of Commerce, 29 
May 40; SW to Senator Morris Sheppard, 31 May 40; 
SW to Senator Tom Connally, 5 Jun 40. All in SW 
files, Air Corps, Gen Questions, item 809a. 

12 See, for example, AC Project Reds (Lyon Papers), 
bk. 29, OCAC Conference, ig Jun 40. 

13 T. P. Wright and A. E. Lombard, Report on a 
Study of Airplane Manufacturing Capacity, 1 Jul 40, 
Airplane Div, NDAC, Rpt 4, copy in AC Project 
Reds (Lyon Papers), bk. 22. Report No. 7, 2? July 
1940, treated engine capacity. See also, Study 21, 

p. 26ff. 



warned, manufacturers should be in- 
formed in advance of the whole load ex- 
pected of them. Any other course of 
action would result in confusion and lost 
motion by forcing individual aircraft 
builders to revise and rework their plant 
expansions with every subsequent alter- 
ation in program. 

With the facts in hand, it was a rela- 
tively easy matter for Army and Navy 
officials to reach agreement on a slicing 
of the productive pie. Having decided 
upon a 36,500 to 13,500 split, each serv- 
ice assumed responsibility for sponsoring 
the facility expansions required by the 
manufacturers with whom it held con- 
tracts. Where individual manufacturers 
served both the Army and Navy, the serv- 
ice with the lion's share of business took 
cognizance. 14 

Although the division of labor agreed 
upon by the Army and Navy mentioned 
only airframe and engine facilities, the 
problem of facilities for accessory items 
was not ignored. Accessory items were 
absolutely vital to completed aircraft, but, 
so long as the small and inadequate staff 
at Wright Field was preoccupied with 
airframes and engines, consideration of 



14 For Army-Navy agreement of 3 July 1940, see 
Memo, ASW for ASN, 16 Jul 40, SW files, Airplanes, 
item 1612. The division was as follows: 

Army: airframes: Beech, Bell, Boeing, Cessna, 
Curtiss, Douglas, Fairchild, 
Lockheed, Martin, North 
American, Republic, Ryan, 
Stearman, Stinson, Vultee 
engines: Allison, Continental, Jacobs, 
Lycoming, Menasco, Wright 
Navy: airframes: Brewster, Grumman, Spartan, 
Vought, Consolidated 
engines: Pratt and Whitney, Ranger 
See also, CofAC to ASW, 8 Jul 40, AFCF 451.1 
Airplanes, Gen. For an indication that the agree- 
ment was not foolproof, see Memo, Asst CofAC for 
CofAC, 10 Dec 40, AFCF, 004.4 Manufacturers. 



294 



BUYING AIRCRAFT 



accessories would have to wait; first things 
had to come first. 15 Furthermore, just as 
airframe capacity was hard to measure, so 
too was it difficult to get precise figures 
on accessory output. There was no con- 
venient yardstick to estimate capacity for 
these items; the only alternative was to 
start from scratch with a new inquiry. 
A flash survey, pending more exhaustive 
study, revealed that a substantial number 
of accessory manufacturers would require 
plant additions. Magnetos, carburetors, 
starters, turbo-superchargers, and almost 
all panel instruments— to mention but a 
few items— threatened to become danger- 
ous chokepoints unless facilities were im- 
mediately expanded. 16 

The NDAC report on capacity had in- 
sisted that manufacturers should be in- 
formed in advance of the total load to be 
assigned them so they could plan accord- 
ingly. This was sound advice, but it was 
an ideal scarcely to be achieved. Staff 
officers were still apportioning the total 
load and planning expansions to suit this 
load when it became evident that the 
"total" capacity figures rested upon an 
unsound premise. In computing the 
load, the NDAC officials had assumed that 
spares and spare parts could be produced 
in sequence to regular production runs 
rather than concurrently with them. 
Thus in the case of propellers, all units 



15 AAF Hist Study 40, p. 73. 

1C R&R, Exec, OCAC, to Chief, Mat Div, 28 Jun 
40, WFCF 111.3 Munitions Program, and reply, 9 
Jul 40, AFCF 453.1 Airplanes, Gen, See also, TWX, 
PES (WF) to Engr Sec (Washington), 5 Jul 40, WFCF 
111.3 Munitions Program, and draft Memo (ASW) 
for Knudsen, NDAC, 26 Sep 40, AFCF 452.1. For an 
interesting insight on the question of expanding the 
facilities of accessory manufacturers, see Fairchild 
Aviation Corp. to Col Volandt, 23 Jul 40, and reply, 
31 Jul 40, AFCF 004.4. 



turned out were earmarked for use on 
aircraft scheduled to be produced. There 
would be no productive capacity avail- 
able for manufacturing spares until the 
end of the program. Such an arrange- 
ment was utterly unacceptable to the air 
arm. Concurrent production of spares 
had to be provided. This meant that 
"total load" had to be revised upward and 
manufacturer's plans for facility expan- 
sions altered accordingly. 17 

Thus, finding the answer to Mr. Knud- 
sen's questions proved to be slow work. 
Not until well into the middle of July 
1940, did the expansion program gather 
headway. Even then the question of fa- 
cilities for the production of accessories 
had yet to be decided. Moreover, still 
remaining was the vexing problem of 
ways and means: how should the pro- 
posed facility expansions be financed? 

Financing Facilities 

On the day following the President's 
statement on 50,000 aircraft, the Secre- 
tary of War had called in a number of 
officials from the War and Treasury De- 
partments to discuss the problems that 
might be anticipated in any effort to reach 
this target figure. All those who met with 
the Secretary were well aware of the ex- 
tent to which the nation's aircraft indus- 
try had already expanded to meet the de- 
mands of foreign purchases. During 1939 
aircraft, engine, and propeller plants had 
been enlarged by approximately a third, 
to a total of 13,000,000 square feet. The 
French and British Governments had con- 
tributed some $72,000,000 toward accel- 

« Memo, Actg CofAC for ASW, 12 Jul 40, AFCF, 
004.4; TWX, Engr Sec (Washington) to PES (WF), 
20 Jul 40, WFCF 111.3 Munitions Program. 



THE PROBLEM OF INDUSTRIAL CAPACITY 



295 



erating airframe production alone, and 
there were, of course, numerous addi- 
tions in floor space and equipment pri- 
vately financed by manufacturers receiv- 
ing foreign orders. The Secretary of War 
and the officials who met with him had 
every reason to recognize the nation's 
enormous debt of gratitude to those for- 
eign states, notably Britain and France, 
who had done so much to hasten the pace 
of rearmament. 18 Now, however, if fur- 
ther expansions were to be undertaken, 
they would have to be financed at home. 
But how? That was the problem. 

The various federal officials who con- 
sidered the problem of facility financing 
in the weeks immediately following the 
President's call thought almost entirely 
in terms of private investment. The gov- 
ernment had no intention of financing 
facility expansions with public funds. 
Indeed, insofar as plant financing was 
concerned, the government had no plans 
at all. 

Not until after the President's message 
to Congress on 16 May 1940 was any 
really sustained and serious considera- 
tion given to the general question of 
financing the construction of whatever 
new capacity might be needed in the na- 
tion's emergency. Those who finally did 
begin to grapple with the problem un- 
doubtedly started out with a predilection 
for private financing, but this did not 
prevent them from exploring and finally 
using a number of alternatives. 18 

18 SW to ASW, 17 May 40, SW files, Airplanes, 
item 1523a. See also, Wesley Frank Craven and 
James Lea Gate, eds., "The Army Air Forces in 
World War II," Men and Planes (Chicago: The Uni- 
versity of Chicago Press, 1955), ch. IX, pp. 299-304. 

19 See especially CPA, Policies Governing Private 
Financing of Emergency Facilities, WPB Special 
Study 1a, pp. 9-10. 



One rather obvious procedure sug- 
gested but immediately rejected as a so- 
lution was to add a small increment to 
the unit cost of each item purchased on 
a production contract. The advantage 
of such a scheme was its simplicity. There 
would be no new and complicated pro- 
cedures to evolve, no problems of special 
financing apart from the basic supply 
contract signed by a contractor who would 
simply handle the whole expansion prob- 
lem in the traditional way, and gladly so, 
since he would be reasonably protected 
against loss. 

There were, however, decided disad- 
vantages to any plan to pay for new ca- 
pacity by added charges to unit costs. 
The nation would be in the position of 
having presented all those fortunate 
enough to hold such war contracts with 
free factories. Moreover, this would be 
over and above any profits that might 
have been earned and without regard to 
whether or not the contractor had per- 
formed efficiently or not. Even if a man- 
ufacturer's wartime production record 
had been sufficiently impressive to win 
him some sort of bonus, an outright gift 
of a new plant was unthinkable and, to 
say the least, indefensible, if for no other 
reason than on the grounds that it would 
give unfair advantage in the postwar 
market to the favored manufacturers who 
were in a position to receive such gifts 
during the war. 20 

A second alternative means of paying 
for emergency plant extensions lay in 
outright government ownership. What- 
ever additions were required would be 
built, paid for, and owned by the gov- 
ernment but operated by private con- 
so Compt Gen to SW, 16 Aug 40, AFCF 016, 



296 



BUYING AIRCRAFT 



tractors. This was the government- 
owned, contractor-operated (GOCO) 
plan. The arrangement offered one de- 
cided advantage: expansions could be 
undertaken at need without thought for 
postwar competitive considerations that 
inevitably colored the thinking of con- 
tractors building plants on private ac- 
count. But in this arrangement there 
were admittedly some disadvantages too. 
If the scheme were adopted, the War 
Department would have to foot the en- 
tire cost of construction at once, and in 
the fall of 1940 the heavy demands on 
available appropriations made it expe- 
dient to avoid such immediate outlays 
where possible. Then too, the many 
legal and administrattive complications 
arising from construction under the aus- 
pices of the Corps of Engineers consti- 
tuted another argument against this form 
of financing. Although the Ordnance 
Department did eventually use the 
GOCO arrangement extensively— for the 
very good reason that virtually no one 
would be interested in owning a shell- 
loading plant in peacetime— the air arm 
used this form of financing only in a few 
exceptional instances. 21 

In air arm circles, special tax conces- 
sions such as the five-year depreciation or 
tax-amortization scheme, already men- 
tioned, were far more popular than out- 
right government construction and own- 
ership. This is hardly surprising, for 
ever since the outbreak of war in Europe 
in 1939 manufacturers in the aircraft in- 
dustry had been urging the War Depart- 
ment to approve some form of rapid 
amortization. There was much to com- 



21 AAF Hist Study 40, pp. 43-44. See also Smith, 
The Army and Economic Mobilization, p. 496ft. 



mend the idea, since as matters stood un- 
der the prevailing tax laws, even when 
foreign states such as France and Britain 
built and paid for facility expansions to 
speed aircraft and engine production of 
individual manufacturers in the United 
States, the money so spent was regarded 
as additions to capital and was taxed as 
such. 

Not surprisingly, manufacturers look- 
ing ahead fearfully to the lean times an- 
ticipated for the postwar era had no de- 
sire to carry the burden of excessive plant 
charges for 10 or 20 years— or long after 
the current emergency— which would be 
the case at the usual depreciation rate 
ranging from 5 percent to 1 2 percent for 
plant and equipment. 22 Individual man- 
ufacturers argued that the government's 
interest as well as that of the manufac- 
turers would best be served by a rapid 
tax-amortization allowance. 23 Rapid tax 
amortization was not all give-away. If, 
for example, a manufacturer had been 
allowed to take a 20-percent depreciation 
allowance for 5 years beginning in 1939, 
he would have written off the plant by 
1943, and with no depreciation to take 
thereafter would have had to meet the 
full bite of wartime taxes for 2 more 
years. Thus, when some manufacturers 
urged immediate and total depreciation 
of extraordinary or emergency facility 
costs and others suggested two-year write- 
downs, they did so with the knowledge 
that it would lay them open to the full 
burden of wartime taxation on earned 



22 Smith, The Army and Economic Mobilization, 
pp. 456-60. 

2S United Aircraft Corp. to CofAC, 18 Sep 39, SW 
files, Airplanes, item 1350; Allison Engineering 
Co. et al., to CofAC, 1 Sep 39, AHO Plans Div, 
145.93-183. 



THE PROBLEM OF INDUSTRIAL CAPACITY 



297 



income. At first blush these proposals 
might seem to be in the nature of an out- 
right steal or what would amount to a 
free gift of plant from the government, 
but even in France, where the socialists 
had not been notably friendly to private 
contractors, three-year tax amortization 
was the order of the day in emergency fa- 
cility expansions. 24 

Perhaps the most telling argument in 
favor of tax amortization was raised by 
the officials of United Aircraft Corpora- 
tion. They pointed out that only by 
heavy expenditures on tooling and equip- 
ment—quite apart from mere floor space 
—could the aircraft industry hope to cut 
over-all production costs and hence re- 
duce unit prices to the government. 25 If 
the government failed to grant deprecia- 
tion concessions, manufacturers would be 
loath to install the very tools that could 
be counted upon to lower prices and speed 
delivery to the government as purchaser. 

All the points mentioned above were 
raised privately in discussions between 
manufacturers and government officials 
in the months following the outbreak of 
war in Europe. And although the idea 
of tax amortization was not brought out 
officially in public until the President 
spoke of it in his fireside chat some ten 
days after he urged Congress to provide 
50,000 airplanes, the proposals of the 
eight or nine months just past were not 
entirely in vain if they helped educate 
War Department officials to the intrica- 
cies involved. 28 



2 *J. C. Ward, president, Fairchild Aircraft, The 
French Aircraft Industry: 1940, Lecture, AIC, 7 
Oct 40. 

25 Wilson, Slipstream, pp. 225-28. 
29 Smith, The Army and Economic Mobilization, 
P- 459. 



Unfortunately, once the proposition to 
grant rapid depreciation concessions en- 
tered the public forum on Capitol Hill, 
a new difficulty appeared. Manufactur- 
ers who were dickering with the govern- 
ment for facility expansions during the 
summer of 1940 were reluctant to tie 
themselves into any rigid contract when 
far more favorable terms might be just 
around the corner in pending legisla- 
tion. 27 Thus, ironically, it turned out 
that the provision for rapid depreciation, 
which promised to be of major impor- 
tance in encouraging manufacturers to 
undertake vast expansions to increase 
production for the emergency, actually 
had the short run effect of delaying those 
expansions— at least until October 1940 
when Congress finally enacted a whole 
basketful of legislation coupling excess 
profits taxes with the rapid depreciation 
privilege and repeal of the amended 
Vinson-Trammell profit curb. 28 

In their zeal to prevent individual 
manufacturers from getting undue ad- 
vantage under the depreciation privilege, 
the congressmen wrote into the law a pro- 
vision requiring War Department offi- 
cials to certify that prices in all contracts 
held by a contractor using rapid depreci- 
ation contained no hidden increment of 
facility cost buried in his showing of pro- 
duction costs. In short, Congress wanted 
to make absolutely certain that no con- 
tractor received double reimbursement 
for his facilities. On its face a sound pre- 

27 See, for example, North American Aviation to 
ASW, 23 Jul 40, SW files, Airplanes, item 1637; and 
ASW to Representative Francis Case, 14 Aug 40, SW 
files, Airplanes, item 1702; as well as lecture draft by 
Materiel Division, for General Arnold to give at 
Army Industrial College, 5 Oct 40, WTCF 350.001 

(>94i)' 

28 See above, ch. |XIII.| 



298 



BUYING AIRCRAFT 



caution, in practice this provision proved 
virtually impossible to administer. Item 
costs were extremely difficult to analyze 
with accuracy in a time of economic flux, 
and cost analysts found it difficult enough 
to squeeze out suet from every item of 
product cost without in addition having 
to pay special heed to facility costs. After 
causing untold delays and annoyances, 
this certification stipulation was removed 
by Congress. 29 

Although the rapid depreciation pro- 
vision was eventually widely used, the 
depreciation privilege alone did not pro- 
vide a full answer to the question of pay- 
ing for emergency extensions to plant. 30 
Even the most liberal tax concessions of- 
fered no assurance to a manufacturer that 
his earnings would be sufficiently high to 
meet the costs that vast factory additions 
would inevitably involve. Moreover, if 
rapid depreciation did meet the depart- 
mental objection to direct government 
financing by forestalling an immediate 
drain on the available appropriations, it 
did not answer the cries of the banking 
community, which anxiously clamored 
for an opportunity to participate in the 
expansions about to be launched across 
the country. 31 For these reasons, as well 
as to provide a means of proceeding while 
waiting for Congress to act, government 
officials and members of the banking fra- 
ternity contrived yet another means for 
financing facility construction. This was 
the emergency plant facility (EPF) con- 
tract. 

The EPF contract was specifically de- 
signed to lure private capital into emer- 

29 Smith, The Army and Economic Mobilization, 
pp. 467-71. 

30 Ibid., p. 475, Table 50. 

31 AAF Hist Study 40, p. 37ft. 



gency construction work. Under its 
terms a manufacturer would undertake 
to build whatever facility the govern- 
ment wished him to, and he would build 
it big enough to meet the needs of the 
emergency without regard to postwar 
economics. For its part, the government 
would agree to buy back the facility from 
the contractor with a series of equal pay- 
ments spread over sixty months. 32 

The advantages of the EPF contract 
are readily apparent. To begin with, it 
promised to place no immediate and 
overwhelming drain on War Department 
appropriations. Because it was designed 
to be bankable, the EPF contract was ex- 
pected to simplify the manufacturer's task 
of borrowing through normal banking 
channels the funds required for factory 
construction contracts. At the same time, 
by leaving the actual problems of design- 
ing and building to the manufacturer, the 
War Department gave him a great deal 
of latitude if not a free hand. Along the 
same line, the manufacturer would en- 
joy virtually complete freedom in oper- 
ating his plant since title would not 
transfer to the government for sixty 
months, which, it was assumed, would 
extend beyond the emergency. On the 
other hand, to keep the contractor from 
extravagance in conducting the expan- 
sion, he was given an option of buying 
the plant at the end of the emergency. 
Obviously, the lower the initial cost, the 
lower the price he might expect to pay 
eventually. 

When put into practice, the EPF con- 
tract revealed a number of unexpected 
shortcomings. Although the EPF con- 

32 This account of the EPF contract is based on 
AAF Historical Study 40, and Smith, The Army and 
Economic Mobilization, pages 476-84. 



THE PROBLEM OF INDUSTRIAL CAPACITY 



299 



tract had been devised at least in part to 
give private banking circles an oppor- 
tunity to participate in financing the 
vast expansion program, the conservative 
banking community insisted upon writ- 
ing in safeguards to the point where EPF 
financing became cumbersome if not un- 
workable. Fearing that Congress might 
not finally appropriate the full amount 
committed for five years in the future, 
the bankers included a clause in the con- 
tracts that, in practice, forced the War 
Department to maintain a cash reserve 
sufficient to meet the whole obligation. 
This led to the ridiculous situation in 
which the government on one hand had 
to pay up to 4 percent in interest charges 
to the banks for loaning money to the 
manufacturers— who passed on this bur- 
den as a cost of doing business— while on 
the other hand the government, which 
is to say the War Department, carried 
balances sufficient to liquidate the entire 
obligation at once. 33 Under such circum- 
stances it was advantageous for the gov- 
ernment to take title immediately by 
prompt payment of the construction 
costs, thus saving needless interest charges. 

There was an additional advantage for 
the manufacturer in prompt payment of 
the EPF contract. So long as a manufac- 
turer retained title to a plant under the 
EPF arrangement, he had to pay state 
taxes on it. In California, where an im- 
portant segment of the airframe industry 
lay, the state government even insisted 
that manufacturers receiving EPF repay- 
ments for facility expenditures had to 



ss The charges involved were by no means trivial. 
For a single project, Ford Dearborn, the interest 
amounted to approximately $1.85 million. See Smith, 
The Army and Economic Mobilization, p. 481, n. 15. 



report them as income and pay state taxes 
accordingly. 34 

The anticipated advantages of the EPF 
contract were clearly outweighed by its 
drawbacks, but there were only revealed 
by experience. Thus, although the air 
arm entered 1 1 EPF contracts beginning 
with the Boeing B-2g plant in Seattle, by 
1945 all of these save two, the Ford Dear- 
born plant and the Martin Middle River 
plant, were either canceled, amended, or 
converted to other types of contracts. 

Probably the most attractive form of 
emergency facility financing was the De- 
fense Plant Corporation (DPC) arrange- 
ment, which came to be used in place of 
the EPF contract. During June 1940, 
Congress authorized the depression-born 
Reconstruction Finance Corporation 
(RFC) to set-up the DPC as a wartime 
holding company, but opposition from 
the banking community delayed the op- 
eration of this agency for some time. Un- 
der DPC auspices a manufacturer selected 
for expansion by the War Department— 
or any other military agency for that mat- 
ter—sized up the task at hand and applied 
for DPC financing. On approval, DPC 
put up the cash and the manufacturer 
occupied the plant on a rental basis, full 
title resting with the government from 
the very start. 35 

There was much to commend the DPC 
form of financing although it, too, did 
not want for difficulties in administer- 



34 That the state tax could make the difference 
between profit and major loss is suggested by the 
California state tax of $800,000 imposed on the Doug- 
las Long Beach facility constructed under an EPF 
contract. See Smith, The Army and Economic Mo- 
bilization, pp. 481-82. 

35 This summary of DPC financing is based on 
Smith, The Army and Economic Mobilization, pp. 
484ff. and AAF Hist Study 40, pp. 39-42. 



300 



BUYING AIRCRAFT 



ing. 38 Because it was not tied down by 
prolonged advance negotiations with the 
bankers and because it did not require 
certifications such as those necessary to 
secure tax amortization, the DPC arrange- 
ment was fast and flexible. Moreover, 
when an expansion project had to be 
modified or enlarged in midstream— and 
experience proved this was to be the typi- 
cal situation— a simple amendment could 
be worked out on the initial DPC agree- 
ment to cover the increased costs. 

DPC financing had still other advan- 
tages. With clear title to the expanded 
facility never out of government hands, 
there could be no difficulty with state 
governments over taxes. And under the 
prevailing federal statutes DPC, as a 
quasi-independent governmental corpo- 
ration, was not subject to audit by the 
General Accounting Office, a circum- 
stance that might have raised the fears 
of some critics but certainly contributed 
notably toward speeding the rearmament 
program, not only in freeing DPC offi- 
cials from cumbersome bureaucratic rou- 
tines but also in avoiding the need for 
accumulating literally tons of bookkeep- 
ing records. 

The DPC scheme was especially accept- 
able to the War Department during the 
hurried months of defense build-up in the 
latter half of 1940 and throughout 1941 
when the rush of work fairly swamped 
departmental staff officers, particularly 
those charged with supervising the con- 
struction projects undertaken for the gov- 
ernment. Since DPC provided a super- 
visory staff of its own on DPC projects, 

36 For an insight on at least one of the difficulties 
met, see the suggestive exchanges contained in IOM, 
Chief, PES, to Chief, Mat Div, 25 Sep 40, and re- 
lated correspondence, AFCF 0044. 



War Department officers were released 
for work elsewhere. Just as it stretched 
personnel, so too the DPC arrangement 
stretched funds. Although Congress ap- 
propriated seemingly astronomical sums 
for defense after May 1940, the War De- 
partment was trying to overcome a gen- 
eration of disarmament all at once; even 
the most lavish grants seemed never 
enough for the tasks at hand. Thus, in- 
sofar as it was able to transfer the bur- 
den, even temporarily, to DPC, the War 
Department could stretch its defense dol- 
lars just so much further. 

A less obvious but no less substantial 
advantage in the DPC scheme of con- 
struction was that it removed the ques- 
tion of facilities from the immediate con- 
cern of those using them. Thus the 
Army and Navy, instead of disputing over 
who should expand a facility and thereby 
get the inside track, could place the proj- 
ect in the somewhat more objective 
hands of the DPC. This was a particu- 
larly advantageous settlement in the 
matter of secondary manufacturers who 
served as vendors and suppliers to the 
prime contractors producing for the serv- 
ices, since here it was not at all uncom- 
mon to encounter individual firms serv- 
ing prime contractors for all the using 
arms. 

By the same token, the dispassionate or 
detached quality of DPC administration 
made it possible for the government to 
drive harder bargains in arranging for 
construction of facilities by individual 
supply contractors. Since DPC officials 
had nothing to do with end-item procure- 
ment, they were not subject to the same 
pressure that beset War Department con- 
tracting officers who might be intimi- 
dated by manufacturers who could insist 



THE PROBLEM OF INDUSTRIAL CAPACITY 



301 



that the provision of facilities on gener- 
ous terms was a necessary prerequisite to 
early delivery of the aircraft and other 
munitions so eagerly sought by the using 
arms. 

Insofar as air materiel was concerned, 
the DPC arrangements proved in prac- 
tice to be a most popular method of 
financing facility expansions during the 
emergency period. Beginning as a rather 
hesitant experiment in August 1940 with 
a DPC plant for the Packard Motor Car 
Company to build the British Rolls- 
Royce aircraft engine, DPC projects at- 
tracted more and more favor until the 
end of the war when the total of DPC 
projects sponsored by the War Depart- 
ment reached 935 and involved some 
three billion dollars in capital. Of these, 
more than 80 percent were air arm proj- 
ects. 37 

Financing expansions of productive 
capacity was one of the crucial problems 
of defense. Until decisions were reached 
here, construction could not go ahead. 
Because mobilization planners in the 
War Department, Treasury, and even 
Congress itself had not prepared effective 
financing procedures in advance, all had 
to be done in haste during the summer 
and fall of 1940. As a result, the deci- 
sions actually reached and the forms of 
financing finally selected in individual 
cases were determined less by logic than 
by accident— the accident of whatever al- 
ternative arrangement was readily avail- 
able at the moment. This was true al- 
most down to Pearl Harbor, by which 
time legislation had combined with ex- 
perience to make possible a more in- 



formed and rational selection of fiscal 
instruments. 

Perhaps the prewar planners could not 
possibly have foreseen and prepared for 
the difficult problem of facility financing, 
but this much at least is clear: the de- 
lays encountered while various officials 
worked out suitable financial instruments 
seriously retarded the nation's rearma- 
ment effort. Delay was the penalty of 
improvisation. At the beginning of Au- 
gust 1940, nearly three months after the 
President had galvanized the country 
with his call for an air armada of 50,000, 
the Air Corps had signed contracts for 
but 33 additional aircraft, although this 
figure rose to 343 by 20 August. 38 To be 
sure, Air Corps contracting officers had 
been ready and waiting, pen in hand, 
since June, but the manufacturers were 
inclined to drag their feet. Understand- 
ably enough, contractors were reluctant 
to sign until Congress made up its mind 
on rapid depreciation, excess profits, and 
profit limitations, and on the whole sub- 
ject of emergency facilities. 

Some manufacturers were hardy 
enough— or foolhardy enough— to go 
ahead with the patriotic business of re- 
armament without waiting for Congress 
and the financial experts to conclude 
their deliberations. But in the main, the 
first round of Air Corps contracts for fa- 
cility expansion initiated in July 1940 
took several months to reduce to terms. 

The First Round of Expansion 

The initial series of facility expansions 
undertaken by the Air Corps involved 



37 Smith, The Army and Economic Mobilization, 
pp. 494-96, especially Tables 51 and 52. 



Craven and Cate, eds., Men and Planes, p. 307. 



302 



BUYING AIRCRAFT 



some twenty projects. 39 After a prelimi- 
nary bout of informal discussions, official 
letters of intent went out on a single day 
in the middle of July 1940 to the first 
thirteen manufacturers selected to re- 
ceive factories. In line with the policy 
agreed upon by the prewar mobilization 
planners, all of these proposals went to 
old-line, established firms in the aviation 
industry, both airframe and engine build- 
ers—the firms with design skills, produc- 
tion experience, and technical know- 
how. 10 

The expansion projects evolved dur- 
ing the summer of 1940 varied according 
to the need in each case. The Boeing 
Airplane Company, for example, under- 
took an extension of its Seattle plant to 
assemble B-17 heavy bombers (Flying 
Fortresses) and in addition agreed to 
build a whole new plant for fabricating 
subassemblies at Wichita, Kansas, the two 
involving an outlay of over $10,000,000. 
Glenn L. Martin agreed to double the 
floor space at its Middle River plant near 
Baltimore to increase production of the 
B-26 medium bomber (the Marauder), a 
project expected to cost nearly $7,000,000. 
And this was only the beginning, since 
changes, overruns, and additions almost 
invariably led to increased expenditures 
in plant expansion projects. North Amer- 
ican Aviation received nearly $2,500,000 
for an addition to the firm's plant at En- 
glewood, California, and at the same time 
agreed to erect an entirely new $6,500,000 
plant at Dallas, Texas, for the production 
of training aircraft. 



39 LI-65, Chief, Mat Div, to Asst Chief, Mat Div, 
21 Aug 40, AFCF 452.1 Aircraft, Gen; Rpt of New 
Productive Capacity, OCAC, Mat Planning Sec, 5 
Sep 40, AFCF 004.4 Manufacturers. 

40 AAF Hist Study 40, p. 73ft. 



In addition to the projects mentioned 
above, Bell, Curtiss-Wright, Republic, 
Vultee, Ryan, Fairchild, and Beech had, 
by the end of October, agreed to various 
types of expansions. These of course 
were only the first in a list that was to 
grow longer and longer as time passed. 
There is no need to describe all of the 
projects sponsored by the Air Corps. 41 
Nevertheless, some of the difficulties en- 
countered in almost every facility expan- 
sions are suggested by a typical example. 

The plant expansion sponsored by the 
Air Corps for the Bell Aircraft Corpora- 
tion in Buffalo, New York, was neither 
the largest nor the smallest undertaken. 43 
It reflects nonetheless a considerable body 
of meaningful experience. The initial 
Bell proposal called for an assembly plant 
of 240,000 square feet, a floor area 400 
by 600 feet, to be used to speed produc- 
tion of the P-39 Airacobra pursuit. Ne- 
gotiators for the manufacturer and the 
air arm dickered at considerable length 
over the amount that would be allowed 
the contractor under an EPF contract to 
construct the proposed plant for the gov- 
ernment. At last they agreed upon a fig- 
ure just over a million dollars. 

The agreement with Bell had scarcely 
passed through the long chain of official 
approvals required— the Secretary of War, 
the NDAC, and the President himself— 
before Bell representatives were back ask- 
ing for the inclusion of $100,000 for "con- 
tingencies not previously considered." 
Even while the negotiators had bar- 



41 An excellent brief survey of the over-all program 
is published in Craven and Cate, eds., Men and 
Planes, p. 3o8fF. 

12 For the Bell story in general, see AFCF 004.41 
Bell EPF, passim. 



THE PROBLEM OF INDUSTRIAL CAPACITY 



303 



gained, it appears, the cost of materials 
and equipment had spiraled— a process 
familiar to those with knowledge of the 
behavior of the national economy under 
the stress of a war boom. A week later 
Bell officials were back again. This time 
they wanted a change order approving a 
$60,000 increase to cover the interest 
charges paid by the manufacturer on the 
money borrowed to finance construction 
of the new plant. When these extras 
were approved the manufacturer re- 
turned with a long list of things allegedly 
forgotten in the initial negotiations. A 
sewer pump, an incinerator, and fluores- 
cent lighting, among other such items, 
were presented for approval as justifying 
an increase over the initial fixed-price 
contract. 

Gradually the irony of the situation 
began to dawn on responsible officials in 
the Air Corps. It was the familiar old 
story of air materiel procurement during 
the previous twenty years repeated all 
over again. Before signing a contract, 
manufacturers were willing to promise 
the moon itself; after signing a contract 
they asked for change orders increasing 
the contract price for every little item 
not included when the original fixed 
price was under consideration. In fair- 
ness, it must be recognized that many 
such change order requests were fully 
justified. In a highly fluid situation it 
was inevitable that unforeseen contin- 
gencies would occur. The Bell requests 
mentioned above may well have been 
justified, but the Chief of the Materiel 
Division, as the officer directly respon- 
sible, began to have qualms. "Some day," 
he said, "there has to be an accounting." 
The cold shadow of a Leavenworth cell 
block fell across the future. If air arm 



negotiators were too liberal, if they failed 
to drive adequately hard bargains, the 
Chief of the Materiel Division observed, 
it would be "terrifically hard to explain" 
at any postwar day of reckoning. 43 The 
appropriate subordinate officials at 
Wright Field were admonished accord- 
ingly. But tightening the purse strings, 
where at all possible, met only one of 
the many problems of facility expansion. 

If the problems of financing vexed 
operation of the various facility expan- 
sions sponsored by the air arm, even more 
troublesome were the complications aris- 
ing out of the perpetually changing scope 
and scale of the projects undertaken. The 
original Bell expansion involved some 
240,000 square feet. By the summer of 
1941 air arm officers were perfecting a 
plan to provide Bell with 500,000 square 
feet of additional space in an entirely 
new DPC plant to build B-17 subassem- 
blies. Despite pressure from OPM offi- 
cials who urged that this new plant be 
located in some other labor area less satu- 
rated with war work, air arm officers ar- 
gued that Bell management resources 
were too thin to allow cadres to be split 
off in order to set up an operation remote 
from the parent plant. Only a few 
months later, soon after Pearl Harbor, 
air arm officials again urged Bell to un- 
dertake an expansion. This time, appar- 
ently ignoring their earlier assertions 
regarding Bell's lack of depth in manage- 
ment, they pressed the manufacturer to 
operate a giant $14,000,000 B— 29 Super- 
fortress heavy bomber assembly plant 
outside Atlanta, Georgia. 



43 Chief, Mat Div, to Asst Chief, Mat Div, 16 Oct 
40, AFCF 004.4. 



304 



BUYING AIRCRAFT 



The record of Bell's experience in fa- 
cility expansion shows that the problem 
of productive capacity kept changing. 
Events in Europe and Asia continually 
raised the sights for aircraft output. As 
a consequence, no grand synthesis, no 
overview, was ever quite possible. One 
day's "ultimate" program was utterly 
lapped by needs rising over the next 
day's horizon. If mobilization planning 
and facility expansion were to be logical, 
orderly, and rational, as T. P. Wright had 
noted in his earliest production studies 
for NDAC, it was essential to get a pic- 
ture of the "whole load." Yet in practice 
it was precisely this "whole load" that 
never could be discovered. Not only 
did the turn of events, both military and 
diplomatic, keep changing the require- 
ment for aircraft output, but Congress 
made available larger and larger funds 
and more flexible means of financing fa- 
cilities. In a very real sense the rules of 
play were in continual flux during the 
entire game. And at the same time the 
industrial managers were themselves 
changing. Bell officials who thought 
they faced a big job when they set to 
work on their first million-dollar expan- 
sion at home in Buffalo were not stag- 
gered when asked to tackle a $14,000,000 
project in Georgia only a little over a 
year later. 

The Bell story illustrates the fact that 
it was difficult to plan for procurement 
when all the factors turned out to be 
widely fluctuating variables. What had 
been visualized as the full expansion 
program in the early summer of 1940 
ended up as merely the first round in a 
long series of expansions. That the first 
round of expansions was entirely inade- 
quate became increasingly apparent dur- 



ing the fall of 1940. 44 By the time the 
President described the nation as the 
Arsenal of Democracy during his fireside 
chat at the end of December 1940, it was 
already clear that it would be necessary 
to look elsewhere for increased aircraft 
production— to Detroit, for instance, with 
the as yet virtually untapped resources 
of the automobile industry and its vast 
congeries of vendors and suppliers. 45 

Enter Detroit: Air Arm Use of the 
Automobile Industry 

Mr. Knudsen Takes the Initiative 

The old-line, established aircraft man- 
ufact